The Bank of Canada is holding at 0.50% again today, March 9. Exports are improving, but weak business investment and job losses in resource-intensive regions are reasons I would keep a Greater Sudbury housing budget grounded in your own income rather than a national headline.
The decision at a glance
| Policy measure | Announcement |
|---|---|
| Overnight target | 0.50% |
| Change | No change |
| Bank Rate | 0.75% |
| Deposit rate | 0.25% |
Exports improve while investment remains the weak link
The fourth quarter was not as weak as the Bank feared, but its near-term outlook is little changed. Household spending and employment remain resilient nationally, while resource-intensive regions continue to lose jobs. Non-energy exports are gaining momentum, especially in industries that benefit from the lower dollar; overall business investment is still very weak.
Oil and the Canadian dollar have both recovered from recent lows. Their averages remain close to the assumptions in January's forecast, so those movements do not yet require a new policy direction. Financial-market volatility is also easing, although the Bank still sees downside risks to global growth.
Headline inflation has reached 2%, but the Bank expects some of the factors behind that rise to unwind. Core measures at or just below 2% are temporarily lifted by earlier currency depreciation while spare capacity restrains prices. The federal budget is still ahead, and the Bank will assess it in April. If you are buying or renewing now, I would not treat today's hold as a promise about the next decision. January's decision explains the lower-commodity-price backdrop to this one.
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’s most recently available weekly bulletin before today’s decision reports these posted reference rates as at March 2, 2016. They are typical posted rates at six major chartered banks, not discounted offers or an assurance of the rate you could obtain. Today’s policy hold does not itself change a lender’s offer.
| 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
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, March 9, 2016. 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.
Expect Moore for Your Real Estate.
— Chad Moore, REALTOR®
— Lake City Realty Ltd., Brokerage