Bank of Canada Mortgage Rate Announcement - December 2021
December 21, 2021 | Posted by: Ron Chan
It's December and you know what that means. No, we're not referring to the arrival of St.Nick and his troop of reindeer in a few short days. While all of that is true, we're instead referencing the fact that the Bank of Canada (BoC) has made their final prime rate announcement of the annum. As expected, the BoC has given home buyers a Holiday season gift that will keep on giving for years if not decades to come. Let's review.
What Home Buyers Need to Know About the December 2021 Bank of Canada Announcement Regarding Lending Rates
Prime Rate Maintains
The overnight rate is being maintained at .25 percent, which for variable rate borrowers is like sweet Christmas carols for the ears. This will keep variable mortgage rates as low as they have been. At press, BMO and RBC are marketing their 5 Year Variable at 1.65%, while TD is dipping as low as 1.55%. Keep in mind that these are examples of 'advertised' rates, and not those that you can get when you partner with a mortgage broker. A mortgage broker with longstanding ties to the community is able to secure bulk discounts with lending institutions that can afford you access to lower and even more affordable variable rate mortgages. And if you still don't like what you see, or are concerned about your credit history, a mortgage broker can still leverage the BoC's stated state of affairs to tap into the private lending market. With options like this, a broker can score you a deal more appropriate to your financial status.
How long will this economic pattern maintain? Allow us to share a statement from the Bank of Canada's December 8th press release for added clarity:
'The Governing Council judges that in view of ongoing excess capacity, the economy continues to require considerable monetary policy support. We remain committed to holding the policy interest rate at the effective lower bound until economic slack is absorbed so that the 2 percent inflation target is sustainably achieved. In the Bank’s October projection, this happens sometime in the middle quarters of 2022. We will provide the appropriate degree of monetary policy stimulus to support the recovery and achieve the inflation target.'
New buyers have a bit of breathing room. If there is to be a lift in the prime rate for 2022, it will not likely occur until the second or third quarter. But don't get too comfortable, as the weeks ahead will come fast and your new year resolve to buy a home can get sidelined if you neglect to act in a timely manner. For instance, after a year of enjoying historically low 5-year fixed mortgage rates, lenders are seeking to recoup financial losses by increasing the cost of locked-in rates. At press, RBC's 5 Year Fixed rate is pegged at 3.07% which is significantly higher than it's approximate 2% mark from before the summer months of 2021. The cost of buying a home is still extremely affordable, but you may not be able to say the same come spring or summer of 2022. Act now.
If buying a home in Winnipeg, contact Ron Chan today at 204.290.9950 to get access to these special fixed mortgage rates and to learn more about incentive programs. Stay tuned for more as the Bank of Canada delivers their next announcement at the onset of the new year.