B of C cuts rate another .25%... But where does this leave my Variable Rate Mortgage?

July 15, 2015

If you have a Variable Rate mortgage, then at some point, you had to make a “risk” decision….”What if rates go up?”

It is always good news when Bank of Canada drops their prime lending rate. Since a varaible floats with prime, your rate would typically decrease the same. But that is not always the case, just because the Bank of Canada decreases a rate, sometimes the banks decide to drop a portion of the rate, and of course, absorb the profits, for example:

January 21st 2015 B of C cut rates .25{ea18e790148ddb141722068dfb73f9f74b06205fa18c7d39ece0e7144d0672b8}…. so if prime rate was 3.00{ea18e790148ddb141722068dfb73f9f74b06205fa18c7d39ece0e7144d0672b8}, it would now drop to 2.75{ea18e790148ddb141722068dfb73f9f74b06205fa18c7d39ece0e7144d0672b8}, but the banks only dropped to 2.85{ea18e790148ddb141722068dfb73f9f74b06205fa18c7d39ece0e7144d0672b8}, .10{ea18e790148ddb141722068dfb73f9f74b06205fa18c7d39ece0e7144d0672b8} apart from B of C

Now July 15th, B of C again has dropped .25{ea18e790148ddb141722068dfb73f9f74b06205fa18c7d39ece0e7144d0672b8} .. so we should see prime at 2.50{ea18e790148ddb141722068dfb73f9f74b06205fa18c7d39ece0e7144d0672b8}…. but it looks as though banks will only drop .10{ea18e790148ddb141722068dfb73f9f74b06205fa18c7d39ece0e7144d0672b8}!!, so yes, another .15{ea18e790148ddb141722068dfb73f9f74b06205fa18c7d39ece0e7144d0672b8} apart from B of C.

So as you can see, our prime rate should be at 2.5{ea18e790148ddb141722068dfb73f9f74b06205fa18c7d39ece0e7144d0672b8}, but will likely be given to us consumers at 2.75{ea18e790148ddb141722068dfb73f9f74b06205fa18c7d39ece0e7144d0672b8}. How does this reflect to our day to day mortgages?… this is why you need to connect with a Mortgage Teacher.

for more info on the Bank of Canada rate cut.