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By Robert Hof

As you know, variable rate mortgage and 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 which in most cases impacts Prime Rate.At 9:00 am EST, Tuesday December 4th, 2012, the Bank of Canada again did what we expected them to do… they continued to maintain their overnight rate. What this means is that once again the prime rate on Variable Rate mortgages, lines of credit or student loans will not change and remains at 3.00%. This of course is fabulous news.Here is an excerpt of the announcement from the Bank of Canada and what they had to say about their decision:”The economic expansion in the United States is progressing at a gradual pace and is being held back by uncertainty related to the fiscal cliff. Europe remains in recession, Chinese growth appears to be stabilizing and global financial conditions remain stimulative, though vulnerable to major shocks from the U.S. or Europe. In Canada, economic activity in the third quarter was weak, owing in part to transitory disruptions in the energy sector… the pace of economic growth is expected to pick up through 2013. The expansion is expected to be driven mainly by growth in consumption and business investment, reflecting very stimulative domestic financial conditions.”

Even though Canada’s economy was slower than expected in the last quarter, the bank still expects it to pick up momentum in 2013. They are unlikely to increase their rate in the foreseeable future with any change most likely to occur sometime in mid to late 2013. Remember, that any increase to the prime rate since 1992 has only been by 0.25% at any ONE time, so we shouldn’t see significant increases all at once.

Fixed rates haven’t changed much at all since the last announcement, at around 2.99% to 3.04% for a five year fixed term.

I’d like to take this opportunity to wish you and your family a very happy holiday and extremely prosperous 2013.

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