How the Overnight Lending Rate Affects Your Northern BC Mortgage

It’s been a big week for interest rates in Canada, so here’s a quick post to get you up to speed:

The Bank of Canada dropped its overnight lending rate by a quarter of a percent last Wednesday, to 0.75% (see this article on In short, this is the interest rate the major financial institutions use to borrow or lend money between themselves for a day, which means it has a direct effect on the loans those banks offer in turn (such as mortgages). This “key policy rate,” as it’s also known, is traditionally matched by the banks in their own interest rate policies (hence the name).

So, for example, if the major banks’ prime lending rate was at 3.00% (which it was as of last Wednesday, and has been since September 2010), consumers should reasonably expect banks to drop to a prime rate of 2.75% as a result of the overnight rate cut of 0.25%.

But that hasn’t happened. The banks have opted to protect their own profits at the expense of Canadians, and the implicit recommendation of the Canadian government. Only yesterday did one of the major banks, RBC, lower their prime rate – but only to 2.85%. The other banks have since followed that lead, though begrudgingly – TD initially announced last week that it wasn’t going to be cutting rates at all.

The fact that the banks’ prime rate cut doesn’t match the overnight lending rate sends a clear message, as does the fact that this is the lowest prime rate cut on record since 1935: the banks are more interested in their own profits than Canadians and Canadian consumers. As Robert McLister puts it via The Globe and Mail, “Bottom line, banks saw this as an opportunity to retain profit in the face of margin pressures…” Or, as David McVay explains: the banks have “reduced their mortgage rates and reduced the prime rate, not as much as the bank rate has gone down, but as much as they consider prudent given the profit pressures they’re under right now.”

If you don’t want your mortgage rate to be “as much as the banks consider prudent,” give me a call at (250) 782-9665. I can get you a rate that you consider prudent.

Lori Lalonde, Your Northern BC Mortgage Broker

(For a more detailed description of the overnight lending rate, check out the Bank of Canada website).

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January 2015 Mortgage Rates

Hey everybody! We’re a little past the midway point of January 2015, so as promised I’m going to give you all an update on the Canadian Housing and Mortgage Market. I know oil prices have been a little low lately, and that may make some of you a bit uneasy, but here’s the good news – as far as your mortgage is concerned, that’s nothing to worry about. Here’s why:

The Canadian bond yield hit an all time low last week, ending the day at just 1.01% (according to Robert McLister at Historically, bond yields have been a good indicator of mortgage rates, and there’s no reason the market shouldn’t adjust to reflect that. Unfortunately, because the banks control a whopping 75% of the mortgage market, they have the power to artificially inflate rates to protect their earnings. According to McLister, the “fair value” for a mortgage in today’s market would be about 2.50% – compare that to the flat 3.00% we’ve seen provided by the big lenders over the past five years or so. He predicts that eventually rates will start falling to match this fair value, but until then, Canadians are at the mercy of the Big 6 lenders. In the best case scenario, one of them will “break rank and start pricing assertively,” but until then, it’s up to buyers to be proactive in asserting their own fair values.

And good news! That’s what I can do for you – I have over 40 lenders all bidding for YOUR money, and they’ll keep going until they give me (and you) the fairest price they can offer. The rate for mortgages in this country is at a historic low, but it’s up to home buyers to make sure they take advantage of that. Do yourself a favour, and find a mortgage broker who knows how to make that happen. My number is (250)-782-9665, and my phone is on 7 days a week.

I can get you not just the mortgage you want, but the mortgage you deserve. Give me a call today!

Lori Lalonde, Your Northern BC Mortgage Broker

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What You Can Expect For Mortgages in 2015

Hey everybody! Happy New Year, for starters. I may be nine days late in saying that, but hey, I’ve been busy!

Firstly, some news about me – I have a new Twitter account you can follow for all the most up to date news about mortgages, Dawson Creek, Fort St. John, and Northern BC that you could possibly hope for. Also, probably some pictures from my upcoming trip to Belize (for which I apologize in advance). I’ll also be making an effort to update this blog more regularly this year, so please subscribe at or simply like my Facebook page and follow along from there.

Speaking of those sites: they’ve both been updated, and I’m in the process of touching up my personal site and my BrokerBase profile as well. Feel free to connect with me at all my various digital outposts, including my Google+ profile and my LinkedIn account. Pick your choice of platform, and let’s be friends!

Now that’s all out of the way, let’s talk about what you can expect in 2015, mortgage wise. There’s a good article by Steve Garganis that you can check out, but I’ll put up the important parts for you right here. In 2015:

  • Interest rates will remain fairly low, as they have during 2014. “5 year fixed rates are under 3.00%.”
  • House prices are expected to remain flat, according to CMHC and the Bank of Canada.
  • There will be an influx of (more expensive) secondary lenders and costly, “no frills” mortgage products that go against consumers’ best interests in favour of the banks.
  • The smart thing for consumers will be to move towards debt consolidation.

The most important takeaway from this is that, as ever, the mortgage landscape in Canada and Northern BC is constantly evolving. My advice to you, as Steve’s is in the article, is this: consult a professional mortgage broker. It’s all too easy to get taken in by the banks or secondary lenders when it comes to getting a mortgage, and that’s what people like me are here to help you with. I have only your best interests at heart. I know that getting a mortgage can be confusing and frustrating. If the idea of doing the research and searching for the best lender or interest rate worries you, or stresses you out, then send me an email or give me a call at (250) 782-9665. I promise you: the peace of mind and knowledge that you’re getting the best mortgage possible is worth it.

So that’s my advice for 2015, everyone. Let’s make this a fantastic year, for mortgages and everything else!

Lori Lalonde, Your Northern BC/Alberta Mortgage Broker

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