It took six days and the major chartered banks did not pass on the full 25 basis point Bank of Canada target overnight lending rate cut to their prime from 3.00% to 2.85% at the end of January. This was good news for all variable rate mortgage holders whose rate is based off the prime rate (e.g., prime minus 60 basis points). Even better news is that bond yields have dipped further causing fixed rate mortgages to touch new lows. So despite all the talk in the media about interest rates edging up in 2015, we are witnessing the precise opposite scenario. Low rates help keep affordability levels attractive and are obviously a strong positive for the real estate market in the short term.
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