The Bank of Canada announced on Tuesday that they were maintaining interest rates. They
also noted that prospects are brighter for the future, with Europe expected to pull out of its recession
later this year and the United States recovering better than expected. The Canadian economy
is also doing well and more recent projections are calling for an increase to GDP projections.

The Canadian economy is pulling ahead due to lower borrowing costs that are fuelling household
spending and business investment. Exports are still weak and higher oil prices are not providing the
expected benefits, according to the government’s Monetary Policy Report.

Inflation is expected to firm up, but stay within the government’s target range.

The government is still saying that household debt is still the number one threat to the Canadian
economy. There is increased concern over the use of home equity lines of credit and the
ATM effect on household net worth. As homes increase in value, homeowners are quick to spend the
appreciation they have experienced. Eventually, as the economy starts to soften, there is concern that
debt levels will be too much and payments too high as rates inevitably increase. This has prompted calls
for tighter rules around this form of lending.

The net effect of all this was no change to rates, but some analysts are looking for an increase in prime
before the end of the year, most likely in Q4. Once that happens, any benefit that could have been
achieved with today’s variable rates is basically eliminated. All the more reason to go with something
more secure like the 3, 4, or 5 year rates that are being offered today.

For those of you looking for more peace of mind, the 10 year rate 3.89% offers a great rate for an
extended period of time. I’m not usually an advocate of 10 year rates, but for those who are really risk
averse, this is not a bad option, not bad at all by historical standards.

Todays Top Rates

Fixed – 1 year
Fixed – 3 year
Fixed – 5 year


Lee Welbanks is a Mortgage Broker with The Mortgage Centre and trusted Spring Realty mortgage expert. To learn more about your funding options please Contact Lee today. Lee will be posting these informative “Market Minutes” each Wednesday for you to enjoy. Please remember to subscribe to the Spring Realty Insider list to receive new blog post notifications, featured properties and insider access to Toronto’s hottest new developments.