The Bank of Canada holds at 0.50% on December 2, 2015. Two economies are adjusting at different speeds.
The decision at a glance
| Policy measure | Announcement |
|---|---|
| Overnight target | 0.50% |
| Change | No change |
| Bank Rate | 0.75% |
| Deposit rate | 0.25% |
Two economies are adjusting at different speeds
The resource sector remains under pressure as commodity prices fall further, while exports outside resources are gaining ground, particularly where a lower Canadian dollar helps competitiveness. The Bank expects growth to moderate in the fourth quarter before strengthening in 2016. It keeps the rate unchanged because the economy is progressing broadly along October's forecast.
The national employment picture is resilient, but that masks significant losses in resource-producing regions. Business investment remains weak because resource companies are reducing spending. This matters for household decisions: a favourable national growth number does not tell a worker how secure their own income is during the adjustment.
Headline inflation remains near the bottom of the target range because of cheaper energy. Core inflation near 2% reflects the weaker dollar offsetting spare capacity, not an economy that has fully recovered. Household vulnerabilities continue to rise. With bond yields slightly higher despite the policy hold, borrowers should compare actual mortgage quotes and retain enough room for ownership costs beyond principal and interest.
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 November 27, 2015 reports the November 25 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 | 3.14% |
| 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, December 2, 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 October’s rate decision.
Expect Moore for Your Real Estate.
— Chad Moore, REALTOR®
— Lake City Realty Ltd., Brokerage