(Credit: Bank of Canada Twitter) Bank of Canada Logo.
The Bank of Canada has announced they are reducing interest rates by .25 per cent from 5 per cent to 4.75 per cent.
“If you have a variable mortgage, you’re going to see a very immediate change in the rate that you are paying.” says associate professor and research chair for banking and insurance analytics Cristian Bravo. “That means either your installment will go down or the time it takes for you to pay will. If you have a fixed mortgage nothing will happen. If you’re close to renewal what you’re going to see is that the rates you are offered will be a quarter of a point down or so.”
(Credit: University of Western Website) Picture of Associate Professor Cristian Bravo
It will be the first time in 4 years that the bank has cut interest rates.
“The Bank of Canada has seen the economy has slowed down significantly in the last nine months, but they only realized that now because Stats Canada revised the numbers a few days ago. The reality is that we have been on the verge of a recession and growing ways slower than what the Bank of Canada thought we were growing for nine months.”
The Bank of Canada will be releasing its next update in July.
“I think in July what they will say depends on the trends. They are going to signal what will come forward. Expect that in July the report is going to sound in their very unique way of talking saying we see that this is either positive or negative. We see that we are going to keep the rates as is in September or we may have some leeway to keep bringing them down.”
Bravo tells Canadians to be patient. He expects the Bank of Canada to lower interest rates over the next year.
