The U.S Federal Reserve slashed their prime lending rate a massive 0.75% this morning in an unexpected surprise announcement, making the largest cut in 23 years. The U.S made their announcement one hour before the Bank of Canada announced their rate cut of 0.25%. The Globe and Mail reports the U.S did not give the Bank of Canada any notice of their surprising cut and by that time the official statement had been handed to journalists leaving the Bank of Canada’s hands tied. Immediately after the announcement TD Bank released their take on the situation and predicts the Bank of Canada dropping rates 0.50% in March to match the U.S and then a further 0.25% in April making Canadian Prime at 5.00% before the start of what could be a very busy spring for Real Estate in Canada.
With these recent developments in mind, a variable rate mortgage with a rate of 0.5%-0.6% below prime is looking very attractive. The possibility exists, come April, to have your rate sitting at 4.50% saving thousands of dollars on many mortgages. The U.S Federal Reserve has forced Canada’s hand and we should see very favorable interest rates over the course of the 2008 year. If you are thinking of refinancing, between now and March might be a very good time to do so. Any questions regarding rates or mortgages feel free to contact me with no obligation!

Until next time,

Joshua Taylor