The Bank of Canada holds at 0.50% on September 9, 2015. Export improvement offsets renewed global uncertainty.
The decision at a glance
| Policy measure | Announcement |
|---|---|
| Overnight target | 0.50% |
| Change | No change |
| Bank Rate | 0.75% |
| Deposit rate | 0.25% |
Export improvement offsets renewed global uncertainty
The Bank holds while the effects of its earlier cuts continue to reach the economy. Household spending and the US recovery are supporting activity. Recent data also show renewed momentum in exports that are sensitive to the Canadian dollar, providing an encouraging sign that the adjustment outside resources is progressing.
The uncertainty is global. Concerns about China and other emerging economies are increasing market volatility and putting further pressure on commodity prices. Canada's resource sector still faces a lengthy adjustment, with effects that can reach other industries. A lower dollar absorbs part of the shock, but it is not a complete offset.
Inflation remains consistent with July's outlook: cheaper energy depresses the headline measure, while currency effects help keep core inflation near 2%. The Bank judges the current rate appropriate for that balance. Greater Sudbury households should separate the financing benefit of low rates from their exposure to changing resource-sector income. Neither an unchanged rate nor one stronger export report settles the outlook for an individual employer or property.
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 September 4, 2015 reports the September 2 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 | 2.70% |
| 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, September 9, 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 July’s rate cut.
Expect Moore for Your Real Estate.
— Chad Moore, REALTOR®
— Lake City Realty Ltd., Brokerage