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5 things to know about July 2015 rate cut from the BOC

General Angela Calla 15 Jul

1.  This is now the lowest prime rate we have seen since 2009.   There have

been 2 prime rate reductions already this year.

2. The banks don’t always respond and reduce their Bank Prime Rate.  They pocket the difference as a profit when they are borrowing money, so it’s common after a rate reduction for them to respond slower and in the most recent reduction they did not match the rate decrease in full.

3. While rates have been at a historic low (or close to it) for the past several years, this does not generally impact your ability to qualify for a

higher loan amount.   So far, there has been no change to the qualifying

rate required to get a variable rate mortgage, which is more than double that of the rate you will actually receive. Variable rate qualification is based on a rate of 4.64%.  In terms of a payment reduction for existing mortgages, only expect an approx $4.00 per 100K. This provides an opportunity to optimize your mortgage by keeping your payment the same or increasing it.

4. Fixed Rates are primarily based on the bond market and Variable Rates are tied to prime rate- whom you select as your mortgage consultant for life must have a plan for watching these indicators, while also putting together a long term mortgage strategy for you.

5. If you have a VRM or LOC, you don’t have to do anything to receive the rate reduction- the lenders will do it for you automatically once they have decided how they will choose to follow the BOC’s announcement.

Want to ensure you have the best mortgage? The Angela Calla Mortgage Team can help you directly at 604-802-3983 or callateam@dominionlending.ca. Contact us today!