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Financial Up-Date!!

Blog by Karen Ashby | January 20th, 2009

Here is today's financial up-date from Paula Siemens AMP of INVIS - SIEMENS GROUP

 January 20, 2009

The Bank of Canada announced that their overnight rate is being reduced by .50bps to 1.50%. If the major financial institutions follow this move prime will be 3%. There is some suggestion that we will not see immediate changes by the lenders due to their cost of funds through deposits and the price they are getting when they go to sell the mortgages that they are committing to. Some suggest that the banks may match this reduction but increase their pricing on variable rate mortgages to in effect, offset this reduction for new borrowers. Some have also suggested that secured lines of credit could be “repriced” mid contract, as these are revolving lines and have clauses within the mortgage document that allows the lender to revisit the arrangement. We certainly do not anticipate that any of these mortgages would be “called” unless the borrowers do not make payments, however, we should be aware that the rates are not set in stone. Once again, this could happen I am not suggesting that this is an a foregone event or that anything is imminent.


The Bank of Canada cited their reason for this further reduction is the deteriorating global economy, and the erosion of household confidence. In order for the global economy to recover the Bank of Canada feels that the global financial system needs to stabilize. They see Canada ’s GDP dropping to 1.2% in 2009, and they anticipate the GDP to improve in 2010 to 3.89%. However, they do admit that we will not be seeing any real inflation in 2009 and that in fact we will see inflation drop below 0 for 2 quarters in 2009 caused by the drop in energy prices, and we will not inflation grow until 2011, which they anticipate to be 2%. What this tells us is that we have further reductions in the overnight rate coming and at the very least we will not see the Bank of Canada increase rates until 2011. This will create some very good opportunities for First Time Home buyers to get historically low rates for their mortgages and this will create an opportunity for borrowers to refinance their current debt at a low rate.


Today’s best rates:


1 yr       3.89%

2 yr       4.59%

3 yr       4.75%

4 yr       4.59%

5 yr       4.69%

7 yr       6.00%

10 yr    6.20%


5 yr rate special 4.49% ( conditions do apply)

Variable prime + .6%


Enjoy your day!


For further information …Please contact Paula Siemens -AMP



902-777 w. Broadway Ave.

Vancouver, BC  V5Z 4J7