Mortgage Monthly Update, January 2021 - Prime Announcement
Scribing this month’s edition with a little person at my feet who's playing with his Kinetic sand, trying desperately not to make a huge mess in daddy’s office – it’s the cutest thing but at the same time as many of us know quite a distraction. Kids belong in school, playing with their little friends and learning in a group environment – not at their parents’ feet while we try and work for a living LOL. I’ve certainly answered a million questions today and while I’m thrilled for the extra time we get to spend together, it also presents its own challenges when balancing work and life and I know we are all growing weary of trying to juggle it all - “enough already” has so many meanings as we begin 2021….
Top of our list is the stay at home order. And while many of us are in the groove from phase I, our economy and many of our more vulnerable citizens are assuredly feeling the pinch. The Q1 projections for the health of the economy are grim which is bolstering some economic watchers to price in a prediction of what could be a “micro-cut” in the Prime rate. This could mean a decrease of 0.10 - 0.15% from Prime and IF enacted, would then need to be trickled down by the lenders who set their own Prime rates and may not feel as generous to flow the discount through. Time will tell, but certainly, at this stage of the cycle, we will see No Increase to Prime.
The reason for the urging of a micro-cut, is to assist with lowering the Loonie which is trading higher than usual since the announcement of stimulus from the Biden administration. Given the US is about to enact a 1.9 Trillion dollar funding bill, the effect on the USD renders the loonie’s comparable trading higher where at last look we were at 78.56 cents. When it costs more to buy Canadian, it affects our exports and therefore our export nation economy. To add insult to injury, President-Elect Biden’s scrapping of the Keystone Pipeline deal which will have an even further deleterious effect on the economy at large – Enough already!!!
I suspect over the short term, as the transfer of power takes place in the US, we will continue to see pockets of civil unrest; it is my sincere hope that cooler heads prevail and we can finally see the release of Donald Trump’s grip on their Nation – Enough Already!
With rates back to all-time lows here at home, coupled with the lack of inventory and the mass exodus of people from major urban centers, house prices have again taken a flaming lead. Equity positions are soaring and savings rates are accelerated with some predictions boasting estimates of Canadian savings to the tune of $170 Billion. Recovery plans are certainly dependant on those funds hitting the street once more of us are vaccinated and we start to reopen.
Never in my 20 years in the industry have home values been higher and rates lower. Never has there been a better time to refinance your mortgage and restructure finances and wealth and achieve home wish lists, never has there been a better time to early renew for a more favorable rate whose term projects at least 5 yrs.
Last but not least, never has there been a more timely and true statement that hindsight is truly 2020 than today! :) Stay well and stay healthy!