Variable mortgage rates are dependent on bank prime lending rates which are dependent on the Bank of Canada interest rate. The Bank of Canada has 2 scheduled interest rate announcement dates remaining for 2012; October 23rd and December 4th.
The current interest rate has remained unchanged for the past two years, the longest period of static interest rates since the mid 1950’s. The chance that this streak will break in 2012 is near zero. Typically the Bank of Canada increases the interest rate to control inflation and put the brakes on the economy while it would lower it to help stimulate growth and spending.
Given that current domestic and international economies are teetering on the edge of another recession, one might think that an interest rate drop might be in order. Certainly not an increase. It’s also highly unlikely that Mark Carney would allow an interest rate decrease given his concerns about the level of indebtedness. This leaves only one other option. Hold interest rates steady for the remainder of 2012 and wait for conditions to change.
This is good news for variable mortgage rate holders. Variable mortgage rates are extremely low and are expected to remain low for the foreseeable future.