Two months can seem like an eternity in the fickle world of finance. Two months can see the optimistic foundations, on which future plans were based, crumble, dissolve in a sea of uncertainty and wash away the hope that lingered previously. On Thursday, the Bank of Canada announced it was to keep its overnight rate untouched once again. Talk had turned to “heightened financial uncertainty”, to contracting domestic growth levels and to US levels of growth which would be “weaker than previously anticipated”. A marked difference from the July 19th meeting, which adopted altogether more optimistic tones and foretold of a time in the near future when the monetary policy “will be withdrawn”, sentiments which were conspicuous by their absence at the latest meeting.

However, the Bank of Canada’s (BoC) decision should come as a surprise to no one — no one who’s been reading our blogs anyway. An economic future which looked comparatively rosy in July has faded with the summer sun as the risk of contagion from an “intensified” European debt crisis and the stagnation in Canada’s largest trading partner (the US) lingers like a dark cloud over the Canadian skyline. Recent months have seen the jobless rate creep up to 7.3% , business productivity plummet to two-year lows, consumer confidence plunging and growth levels contract by 0.4% — hardly an environment conducive to monetary tightening.

While this obviously presents wider concerns for the Canadian citizen at large, it does bode well for the existing MorCan Direct clients who took our advice and secured variable rate mortgages for themselves at rock bottom rates as Marcus explained last week on CBC The National. Talk has shifted from increasing rates, to fortifying an economy which is looking increasingly shaky. This makes the probability of increases in the near future seem increasingly small and once again, we would suggest any client currently locked into a fixed rate, finding themselves casting lascivious glances towards our variable rates, to give MorCan Direct a call today (416-214-9000) and see if it would make sense for you to break your current mortgage.

For those among you however who still feel uneasy with the idea of fluctuating payments, there is also good news. Fixed rates have plummeted in recent months and the 5 year government bond yield (which acts as an indication of fixed mortgage rates) fell to all-time lows over the last week, signalling potential further decreases in fixed rates to come. One final thing to note is that neither the ultra-low overnight rate set by the BoC or the sharp drop in bond yields will likely bear any influence on the rate your credit card company charges you. With mortgage rates so low, it makes no sense paying these rapacious rates but don’t take our word for it, take Ursula’s . If you wish to break your current mortgage and hear about how we could secure a lower rate for you, or if you wish to consolidate some of your current debt, or if you just want to avail of some of our sound, unbiased mortgage advice, contact one of our knowledgeable agents today.


Marcus Tzaferis