Office: 165 Pretoria Avenue, Ottawa ON. K1S 1X1

Phone: 613.238.2801

Fax: 613.238.4583


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A financial update from Gemma Riley-Laurin

By Robert Hof

As you know, variable rate mortgages, lines of credit and/or student loans are all based on the Prime Rate and as promised, here is your personal update from me on the recent Bank of Canada announcement on changes to their overnight rate. The overnight rate only impacts variable rate mortgages.

At 9:00 am EST, Tuesday October 23rd, 2012, the Bank of Canada again did what we expected them to do… they maintained their overnight rate. What this means to you is that the prime rate on variable rate mortgages, lines of credit or student loans will not change and remains at 3.00%.

As always, I recommend you chat with a financial adviser about a Tax Free Savings Account or some RRSP contributions to trigger a potential income tax refund next year as your payments continue to remain low! If you don’t have a financial adviser, let me know and I’d be happy to recommend one to you.

Here is an excerpt of the announcement from the Bank of Canada and what they had to say about their decision:

The global economy has unfolded broadly as the Bank projected… “The economic expansion in the United States is progressing at a gradual pace. Europe is in recession and recent indicators point to a continued contraction. In China and other major emerging economies, growth has slowed somewhat more than expected, though there are signs of stabilization around current growth rates. Notwithstanding the slowdown in global economic activity, prices for oil and other commodities produced in Canada have, on average, increased in recent months. Global financial conditions have improved, supported by aggressive policy actions of major central banks, but sentiment remains fragile. In Canada, while global headwinds continue to restrain economic activity, domestic factors are supporting a moderate expansion”

The overall economic growth in Canada is expected to pick up and return to full capacity by the end of 2013. Based on this outlook, the bank has indicated they are unlikely to increase their rate in the foreseeable future although very much dependent on the continued trend. A change is likely to occur sometime in 2013 but remember any increase to the prime rate since 1992 has only been by 0.25% at any ONE time, so you won’t see a large significant increase all at once.

Fixed rates haven’t changed much at all since the last announcement, at around 2.97% to 3.19% for a five year fixed term.

Based on this recent announcement, the anticipation is that the prime rate will remain low for a while now. The next announcement on any change to the prime rate is December 4th, 2012 at which time I’ll be in touch again.

Gemma Riley-Laurin
(613)238-3521 ext 312

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