Bank of Canada cuts rates again - Calgarypuck Forums - The Unofficial Calgary Flames Fan Community

Mike Oxlong · 01-20-2009, 09:00 AM

The Bank of Canada cut its overnight lending rate by .5% again today. They are now at an all time low.
http://finance.sympatico.msn.ca/inve...entid=16973238
(I should have read this more thoroughly. The banks have dropped by the same .5%. Prime is now 3% as most lenders. Variable rate mortgage holders rejoice!)

Good news for people in Variable rate mortgages!

Although the BoC cut the rate by .5% we will have to wait to see exactly how far the major banks will end up cutting theirs. In December when the BoC dropped .75% the banks only dropped .5%.

I'll keep my eyes and ears open for word from the banks as to what they intend on doing and update this thread.

Resolute 14 · 01-20-2009, 09:02 AM

As long as interest rates keep going lower until December, I'm happy.

Madman · 01-20-2009, 09:02 AM

I'm sure the banks will somehow find a way to spin this into no drop or a 12% increase.

A couple weeks ago, there was some knob on Rutherford trying to defend why banks don't pass on the full rate cut - crying about how it costs money to lend moeny and how banks need to go borrow their own money to lend it out....sure, the banks have no money.

Bertuzzied · 01-20-2009, 09:04 AM

Bank of Montreal just cut a half percent to 3%.

So the other banks should follow.

albertGQ · 01-20-2009, 09:14 AM

I'm so pissed. I have three years left at 5.6% fixed. Anyone know if I should pay the penalty for this and get a VRM?

FLAMESRULE · 01-20-2009, 09:15 AM

TD cut the full 0.5% as well...man I'm glad we got a variable rate...2.5% mortgage and 3% HELOC come February! An extra ~40% to our principal every payment (fixed payment with a variable rate).

ah123 · 01-20-2009, 09:16 AM

Quote:

Originally Posted by albertGQ

I'm so pissed. I have three years left at 5.6% fixed. Anyone know if I should pay the penalty for this and get a VRM?

Lucky you...I have three years left at 5.95%

Bertuzzied · 01-20-2009, 09:20 AM

Yeah that totally sucks for people who are locked in. Within a year I go from paying $1500/month where $1350 goes towards interest only and $150/month goes to principal, to half and half now. $750 to interest and $750 to principal. What a huge difference.

Sylvanfan · 01-20-2009, 09:22 AM

There will be more of these to come. I heard that another .5% is likely in March. Traditionally Canada's economy lags the US by about a year, so if things down there don't pick up the B.O.C. may have to go to a 0% rate too.

On one hand I was happy to sell my house last summer before it lost all value....But that Prime -.5% variable rate mortgage is something I'll never see again.

Slava · 01-20-2009, 09:23 AM

Usually the penalties to drop the mortgage are either 3 months interest or the interest rate differential. Its worth taking a look though....given that the rates are at historical lows!

nik- · 01-20-2009, 09:36 AM

Quote:

Originally Posted by Bertuzzied

Bank of Montreal just cut a half percent to 3%.

So the other banks should follow.

Where did you find this information?

Bobblehead · 01-20-2009, 09:36 AM

My mortgage comes due at the end of the month. I'm working (with Mike Oxlong) and from the letter sent to me 2 weeks ago to today, there is a 2% drop in rate for what they are offering (in 5yr fixed, just as a benchmark).

And from what i have read, the only reason there wasn't a .75 drop was the BoC wanted to keep a little more room to drop after the budget is tabled, if required.

Bertuzzied · 01-20-2009, 09:40 AM

Quote:

Originally Posted by nik-

Where did you find this information?

http://www.calgaryherald.com/busines...505/story.html

Bank of Montreal appeared to be the first chartered bank to match the central bank’s move, saying in a statement it was decreasing its prime rate to 3% from 3.5%, effective Wednesday. Most of its competitors quickly followed.

Mike Oxlong · 01-20-2009, 09:41 AM

To the guys that are locked in to a 5.6% or 5.95% rate. Like Slava said it might be worth looking at getting out of your current mortgage. Call your banks and ask them what the payout penalty would be.

Feel free to contact me once you know the payout amount and I can run some numbers to try and help you determine if it is worth paying the penalty and getting into a different mortgage.

It might even be worth getting locked into a new 5 year fixed. You can get great deals in the 4.49% to 4.79% range.

Resolute 14 · 01-20-2009, 09:52 AM

Quote:

Originally Posted by ah123

Lucky you...I have three years left at 5.95%

My mom has you beat... she's at 6.25%. She wasn't happy when I told her mine was at 4.35%, heh.

jus_sum_guy · 01-20-2009, 09:55 AM

Locked in here as well. But only at 3.85 %

bomber317 · 01-20-2009, 10:00 AM

Quote:

Originally Posted by jus_sum_guy

Locked in here as well. But only at 3.85 %

man, what term did you get? that's a pretty good rate to be locked in at.

I'm in at 4.5%

Nufy · 01-20-2009, 10:09 AM

Yippee....I just signed for my HELOC at prime.......

jeremywilhelm · 01-20-2009, 10:11 AM

So does this mean the banks are more likely to give out a loan to a person, or less likely? I took economics about 10 years ago, so i have completely forgotten how recessions and depressions affect the banks propensity to give out loans and new mortgages.

I ask because i need to finish my basement and figure taking out a loan is the easiest way to do it.

Bertuzzied · 01-20-2009, 10:12 AM

Quote:

Originally Posted by Mike Oxlong

It might even be worth getting locked into a new 5 year fixed. You can get great deals in the 4.49% to 4.79% range.

Not 100% sure but i think you would only save if you switched from your fixed to a variable. If you go from fixed to fixed you would be paying the full interest differential. up front!