Episode 68 Transcript – Bank of Canada rate drop

Happy Tuesday! Happy Tuesday, you ask why? I’m going to tell you! A year of Jessi Johnson live and it’s Tuesday, January 20th. Happy Tuesday is because the Bank of Canada lowered their lending rate again, as I did predict although I personally thought it was going to be about a quarter point, I didn’t think they would actually drop it 50 basis points. The Bank of Canada overnight lending rate now sits at 1% which is a record low. Unbelievably low in an attempt to stimulate the real estate economy in Canada. Not that rates are already low already. The million dollar question here is will the banks follow suit. What I mean by that is, in the past I’ve talked about various decreases where say we go down by 75 basis points but the banks would only drop a quarter point and keep 50 for themselves. I’ve done some research this morning and a number of banks to whom I’ve spoken to, to whom I can access, have dropped the entire half point. That means that their prime rate is at 3% so right now the banks are making 2% off the Bank of Canada’s money. Normally it is 1.5%. That difference of 50 basis points is from the previous point I just finished talking about. Either way, what does this do? It basically means those people with variable, whomever they are right now, me, are paying 2.4% on their mortgage. Unbelievable! I feel like I’ve got a student loan. For those looking to get into the variable market it’s still not perfect. I can get prime plus .6% or 60 basis points. In the past it would’ve been prime minus .6, minus .8, minus 1 so it’s still not great but bottom line is rates are really low, prices are really low. I think it’s a good time to be in this market. You can reach me at www.firsthomeinfo.ca or www.jessijohnson.com. Have a good day! Bye.