Overnight lending rate is the rate generally set by Bank of Canada. Big banks set (generally speaking) their prime rate 200 basis points above the BoC rate.
In Canada weather is very unpredictable. Fortunately to accompany Canadian weather – financial forecasts are catching up. They change just like the weather. They are different just as two weather news reporters. The differences in the forecasts can be explained using financial butterfly effect.
A bankruptcy in Antarctica may influence Canadian interest rates. Even after our fin min changed the mortgage insurance regulations – some more de-railed plans to save the plan of planned European financial easing will drive the interest rate down, good enough to give boost to the new buyers.
Despite of my endless ranting about the failed financial forecasts – I still read them and try to figure my future gains or losses. I guess this is my nature. Initially I think forecasts were there to aid plans. So, if you want to plan (which you should do) then looking into the future is a must.
Getting a mortgage is a planned process. Part of the plan is to decide the term and rate type. So, a mortgagor is forced to look into the future. In ancient time only few had the ability to look into the future. Today they go to universities, use advance tools and they use different titles.
So, no matter how fragile it is – we still use forecasts. Even after saying all those – we do understand how difficult it is to prepare a financial forecast and we are thankful to those analysts. At present we unfortunately lack the knowledge and ability to perfectly simulate the future and offer a near prefect prediction. Given the nature of the market – it is very unlikely that this trend will alter its course in future. For now, take what you get.
RBC
TD
Scotia
