eLoan Canada

The big 5 Canadian banks have been showing considerable rise in their prime lending rates today after the Bank of Canada’s rate hike earlier in this week. Banks like RBC, TD, BMO, CIBC and Scotiabank have increased their Prime lending rates by 0.25% to 2.75%, effective July 21. It also increased variable mortgage rates, including those offered by brokers as well, for the best mortgage rate that were closed at 1.75% for a 5 year variable previously was now expected to increase up to 2.00% now.

The Bank of Canada hiked its key interest rate by a quarter point earlier this week! For the second month in a row.

In its statement the Bank noted that it “expects the economic recovery in Canada to be more gradual than it had projected in last April, with growth of 3.5% in 2010, 2.9% in 2011, and 2.2% in 2012. This revision reflects a slightly weaker profile for global economic growth and more modest consumption growth in Canada.”

Most lending institutions including Canadian big banks are expected to respond to the Bank’s rate hike by increasing their prime lending rates by a minimum quarter point. However, lenders do vary in when exactly they adjust their rates for variable-rate mortgages. Contact your bank or a mortgage professional for more information on how a particular lender may implement a rate increase. As its a time when mortgage holders or potential borrowers should sit down with their mortgage professional to explore their options and decide what makes the most sense for their own financial situation.

A competitive five-year fixed mortgage rate is available to qualified borrowers at 4.29%, while with the Bank’s rate increased, a competitive variable rate mortgage is available to qualified borrowers at 2.15%, prime of 2.75 per cent minus 0.60 per cent.

Prime & variable mortgage rates update with Canada’s lenders / brokers / bankers as of July 21, 2010:

• Dominion Lending – Prime rate: 2.75%; Change (%): +0.25%; Variable mortgage rate: 2.00%; Change (%): +0.25%
• ScotiaBank – Prime rate: 2.75%; Change (%): +0.25%; Variable mortgage rate: 2.60%; Change (%): +0.25%
• CIBC – Prime rate: 2.75%; Change (%): +0.25%; Variable mortgage rate: 2.60%; Change (%): +0.25%
• RBC – Prime rate: 2.75%; Change (%): +0.25%; Variable mortgage rate: 2.60%; Change (%): +0.25%
• Canada Trust – Prime rate: 2.75%; Change (%): +0.25%; Variable mortgage rate: 2.35%*; Change (%): +0%*

As far as the Fixed-rate mortgages are concerned, it will not get any changes directly by the Bank of Canada rate hike announcement as their rates are influenced more by movements in the bond market.

Compare the Canadian best mortgage rates from banks and brokers!

Lending rates hit record low when Bank of Canada announced last month, on January 20th that it would cut its key policy rate by half a percentage point. Instant market reaction was detected when BOC chopped its main interest to historical lowest rate ever.

Banking sector depresses Stocks and Loonie down after Bank of Canada cuts interest rate by half a point! The Toronto stock market was down over 100 points in early trading that took composite index tumbled latter at 177.7 points to 8,663.8 while Canadian dollar was down half a cent US after the Bank of Canada cut its key interest rate to one per cent.

On the other hand Canadian senior citizens don’t seem to be happy with the interest cut down because their interest returns on their investment and saving with the bank will affect their already fixed and limited means to squeeze more.

What Does It Affect You As A Debtor On Having Various Forms Of Debt?

• Canadian Consumer Having A Mortgage Loan!

Fixed-rate pricing on downward trend! If your interest rate is fixed, pricing for fixed rate mortgages is higher than it normally would be, as lenders are accounting for higher perceived risk in the financial services industry.  The spread between a five-year Government of Canada Bond (1.58 per cent) and a competitive fixed rate mortgage rate (4.79 per cent) is now 3.21 per cent – which is much higher than what we have seen over the last few years.

Variable mortgages offer savings! If you have a variable rate mortgage, your payment level in most cases will remain the unchanged, but more of your payment will go towards the principal and less to interest. So you will be paying off your home more quickly. Moreover, whether the lower policy rate from the Bank of Canada will translate to lower interest rates for some borrowers remains to be seen, but variable-rate mortgages are still a cheaper option than they were a year ago.

• Canadian Consumer Having A Credit Card!

Credit cards will likely remain where they are, at least for the time being. Given the state of the economy, credit-card companies are concerned about potentially higher delinquency rates. Their write-offs tend to be higher in tough economic times.

• Canadian Consumer Having A Car Loan!

Car industry is going through a hard economic situation globally and so does here in Canada, although sluggish export results low production, high prices and cut jobs but government has taken timely steps to improve its efficiency in a way domestic sales on car prices will stay at moderate level. So, car loans seem to have remained fairly steady.

• Canadian Consumer Having A Lines Of Credit!

Reduction in the prime rate leads to immediate savings for those who have variable rate mortgages, lines of credit and other floating interest rate loans. If your line of credit is tied to the prime rate and you are paying interest only, your payment will decrease. If you have a set payment, more of it will be applied to the principal and less to the interest.

• Is It A Best Time For The Investors!

In trading business, your success depends on your purchase, that’s why big companies have more margins in their sales than the smaller companies because they cant get the benefits associated with the bulk purchases. Anyhow, it’s a best time especially for those who are having a right investment plan or opportunity where they can reinvest their borrowed money on such low interest rate. Although, most of the people will also planning to take advantage of more low interest rate by a half-percentage point which is expected to fall in June 10, 2009. But remember this next interest rate fall is not confirmed because it will only implemented if economy required to keep moving. But if you have a right investment today, tomorrow you may not, so don’t pass it away I guess I can see it being somewhat attractive.

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