-0.5% Reduction to Prime Lending Rate...AGAIN!

What does this mean for our variable rate loving clients?

Although The Bank of Canada reduced their overnight rate for the second time within a 10 day period, the individual banks have not yet followed with the second drop - however it’s not to say this won’t happen anytime. Don’t be fooled though - that certainly doesn’t mean the variable terms are not good options. Bank Prime is presently 3.45%.

If you’re interested in a variable rate term, you couldn’t pick a better time to get one.....That is until the banks reduce their spreads. As it stands today you could secure a variable rate at prime -1.10% with many banks. This translates into a rate at 2.35%. However, with the recent reductions to the prime lending rate, the banks are on notice and will start to reduce their spread in variable terms. In the very near future the spread will be closer to prime -.10% translating to a 1% difference and a rate closer to 3.35%. Canadian economists have forecasted that prime lending rate should stay low and we’ll likely see additional drops.

The bottom line - you can ride the variable train and it will be a smooth trip. If you can secure a variable rate now at the larger spreads YOU ARE WINNING!