The Bank of Canada holds at 0.75% on April 15, 2015. A stalled first quarter, with a rebound still expected.
The decision at a glance
| Policy measure | Announcement |
|---|---|
| Overnight target | 0.75% |
| Change | No change |
| Bank Rate | 1.00% |
| Deposit rate | 0.50% |
A stalled first quarter, with a rebound still expected
The Bank estimates that Canada's economy stalled in the first quarter. It sees the oil shock arriving faster than expected, rather than becoming larger overall. That distinction explains why it holds the rate: the current weakness is serious, but the projected recovery still rests on stronger US demand, non-energy exports and easier financing.
The growth forecast is now 1.9% for 2015, followed by 2.5% in 2016. The Bank expects activity to recover in the second quarter and strengthen around mid-year. These are conditional expectations; a rebound in exports must eventually lead to investment and employment for the recovery to become durable.
Headline inflation is 1%, reflecting cheaper energy. Core inflation near 2% combines upward pressure from the weaker dollar with downward pressure from spare economic capacity. The Bank expects those forces to unwind as the economy returns to full capacity around the end of 2016. For households, today's hold leaves the financing backdrop supportive without removing the need to budget for income or property-cost surprises.
What this means for a mortgage
The overnight target influences short-term borrowing costs, including lender prime rates. Variable mortgages and home-equity lines of credit are more directly exposed to prime-rate changes. Fixed mortgage offers also depend on bond yields, funding costs, the term and lender competition; they can move even when the Bank holds.
The Bank of Canada’s Weekly Financial Statistics bulletin of April 10, 2015 reports the April 8 posted reference rates below. These are typical posted rates at six major chartered banks, not discounted offers or an assurance of the rate a borrower can obtain. They should not be read as proof that a lender has already passed through today’s decision.
| Posted reference | Rate |
|---|---|
| Prime | 2.85% |
| One-year conventional mortgage | 2.89% |
| Five-year conventional mortgage | 4.64% |
Payment illustration: a $300,000 mortgage amortized over 25 years at the 4.64% posted five-year rate is approximately $1,684 per month for principal and interest, using Canadian semi-annual compounding. This is an illustration, not a lender quote. Taxes, insurance, utilities, closing costs and qualification requirements are separate.
Put the announcement into a Greater Sudbury plan
Buying or renewing
If you’re buying or renewing in Greater Sudbury, I’d ask for written figures using your balance, down payment and amortization. Compare payment mechanics, prepayment options, penalties and the cash left after closing. A variable mortgage with fixed payments may change how much principal you repay instead of changing the payment immediately; the contract determines the result.
Preparing to sell
Financing affects what buyers can carry, but it does not set one price for every home. Compare recent sales and active alternatives in the same neighbourhood and price range. Condition, carrying costs, presentation and offer terms remain central to the decision.
Official announcement: Bank of Canada, April 15, 2015. The national policy decision does not, by itself, establish a change in Greater Sudbury property values.
For a local plan, explore the Buyer Experience or Seller Experience. For the preceding decision, see March’s rate hold.
Expect Moore for Your Real Estate.
— Chad Moore, REALTOR®
— Lake City Realty Ltd., Brokerage