Bank of Canada Holds Key Target Rate at 1.75%

The Bank of Canada is maintaining its key target interest rate at 1.75%, and the reasons given are board and point fingers everywhere.

From general statements like a slower-than-expected start for the Canadian economy for 2020 to considerable uncertainty about how long household spending may stay soft, and blanket statements about weakness in the manufacturing sector.

Tensions between Iran and the United States are also fueling fears of potential issues related to escalations after the tragic attack of a Ukrainian passenger jet.

The United States is also causing huge waves with tariff threats against Brazil, Argentina and France.

For the average Canadian keeping rates where they are is good news, but from the Bank of Canadians perspective, they would like to increase the rate to essential show the world how well Canada is doing and intice global economic investment, among other things.

But what does all this mean to you, what should you be doing?

Needed Action

Since the overnight benchmark has stayed the same there nothing that you absolutely need to do, your mortgage payment is staying the same, so you don’t have to deal with any payment adjustments.

But (of course, there’s a but) every Canadian is currently presented with an opportunity to take advantage of these low mortgage rates that we are currently presented with.

So here are a few little things you can do to take advantage of low-interest rates:

Consider increasing your mortgage payment!

Look interest rates are low, why not calculate what your payment would like if rates where to jump and just start paying that payment now.

Any additional payment that you make above your regular payment goes straight to principal, and small increases can make a huge difference.

Consider putting some extra money towards retirement or savings!

Instead of taking advantage of lower rates by paying your mortgage down faster, consider putting that extra money towards your RSP, TFSA or even start a non-registered investment portfolio and make your mortgage tax-deductible.

Consolidate some debt!

Debt consolidation can be a nasty word, but when done correctly can make a massive impact on your financial situation. Don’t be afraid to reach out to me and discuss options, its the only to know if you could be making your life way easier with a single payment every month vs 3-4.

Consider Home Renovations!

If you wanted that dream kitchen or bathroom, or your house just needs a little work now could be the time. Taking advantage of lower interest rates allows you to get the money you need to renovate without breaking the bank.

Do all four!

There is nothing stopping you from doing everything on this list! I call it a balanced approach. Put a little extra money away for retirement, a slight increase to your mortgage payment, and doing some home renovations can be all done at the same time.