GREAT NEWS

The Bank of Canada announced this morning that it will leave its key interest rate unchanged at 0.25%. Therefore the banks are holding  Prime rate at 2.25%. 

The Bank of Canada also reiterated its commitment to hold its key rate at the current level until the end of the second quarter of 2010, conditional on the outlook for inflation.   The Bank of Canada's next scheduled overnight rate announcement is July 21st, 2009.  

Pricing for fixed-rate mortgages are not directly affected by today's announcement.  At the same time, some rates on the five-year fixed-rate mortgage have edged up slightly this week.

A comparison of fixed rates today versus six months ago shows a noticeable improvement in purchasing power.  Six months ago, a competitive rate on a five-year fixed mortgage was 5.75 per cent.  At this rate, the monthly payment on a $250,000 mortgage with a 25-year amortization was $1,563.  With the five-year rate of 3.95 per cent available today, the monthly payment falls to $1,308, which adds up to a savings of $15,300 in payments over the five year term.   

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