Anyone who has been reading anything about the mortgage rate trends has noticed that while the rates have been low for what seems almost as long as the Maple Leafs have gone without a Stanley Cup, there’s more to the story than just the availability of cheap loans.
It seems there’s a bottom to the well when it comes to the banks lowering their rates in step with the new federal rate cut. In other words, it seems likely the major banks won’t mirror the actions by the Bank of Canada when they cut their rates twice this year in hopes of stimulating the Canadian economy. Still, there are some mortgage related benefits for Canadians and especially those that are holding variable mortgages. If you were adventuresome enough to sign on for one of these mortgages where the payments are linked to the fluctuations in the prime interest rate, you’ll see some savings on the outstanding amount on your mortgage, although that amount might not be as big as you might like.
There are some other winners and if you’ve been trying to sort through all the positives and negatives when it comes to these historic rate drops, lines of credit have their place on the good side of the ledger. Because the rates for these are generally tied to the Bank of Canada’s overnight rate and your bank’s prime interest rate, you could see the rate drop even lower depending on what your bank decides to do.
Finally, you need to consider the buying power of the Canadian dollar has fallen dramatically since the Bank of Canada announcement and that’s not good news for anyone planning to travel or vacation in the United States.