Bank of Canada Raises rate by .25%

The bank of Canada announced today that it is again raising the overnight rate by 1/4% today (bringing the bank prime rate to 2.75%). This rate increase was expected by most annalists and the major banks. The overall Canadian economic recovery pace has slowed down slightly from what was originally expected.

The Bank expects the economic recovery in Canada to be more gradual than it had projected
Inflation in Canada has been broadly in line with the Bank's April projection. While the Bank now expects the economy to return to full capacity at the end of 2011, two quarters later than had been anticipated in April, the underlying dynamics for inflation are little changed. Both total CPI and core inflation are expected to remain near 2 per cent throughout the projection period, which should keep the interest hikes at a manageable level.

HST how does it work?

HST comes into effect for every one who resides in British Columbia tomorrow. What does that mean to have average person living in BC? How much is it going to increase your cost of living each year and what is going to be taxed differently. Click here for the New HST website to help you figure it out.

Fixed or Variable Rates? Why not both?

when getting a new mortgage or if you are renewing our current mortgage, the big question is do you go with a variable (floating rate) or take the security of a fixed rate. In recent years a number of lenders will allow you to have both mortgages, under the umbrella of one mortgage. In laymen terms they are called combination or hybrid mortgages, where the lenders will allow you to take advantage of the very low variable rate for a potion of your mortgage and put the rest in a secure fixed rate. This gives you the best of both worlds. When using a mortgage broker you will always get the wholesale rates as well as the right advice to determine if this type of mortgage is best for you. Please click here for the complete article form National Post.

Bank of Canada Raises rate by .25%

After more than a year at a record low level, Bank of Canada Governor Mark Carney raised the benchmark interest rate for the first time since 2007 by one-quarter percentage point to 0.5 per cent(banks prime rate to 2.5%). This is the first time since 2007 that that rate has increased and the Bank of Canada is the first in the Group of Seven to do so since the financial crisis and recession began in 2008.

In a statement Carney emphasized that the increase should not be interpreted as just the first of more to come. "This decision still leaves considerable monetary stimulus in place, consistent with achieving the 2 per cent inflation target in light of the significant excess supply in Canada, the strength of domestic spending and the uneven global recovery,'' the central bank said. ``Given the considerable uncertainty surrounding the outlook, any further reduction of monetary stimulus would have to be weighed carefully against domestic and global economic developments.''

Click here to read the BOC press release.

BOC expected to raise rates June 1st

Higher than expected inflation, strong retail sales and the fact that Canada is leading the economic recovery are just some of the reasons we may see a rate hike when the Bank of Canada meets June 1st. Domestically speaking all signs point to a rate increase of probably .25%. The record low interest rate is of .25% is too low considering our economic position the past few months, and was kept there this past year as an emergency action to stimulate consumer spending.

To read the full story click here

Tips on how to make use of your tax refund

1. Pay down your RRSP loan or make your 2010 RRSP contribution now

2. Pay down credit card debt
(interest on some credit cards can eat away at your savings. Reduce the cost of credit by using your tax refund to reduce or pay down your credit card balances, targeting the highest rates first).

3. Lump sum mortgage payment
(if you have a mortgage, it is a good idea to use your tax refund to make a lump sum payment. Applied directly to your principal, a lump some payment could save you significant dollars in interest costs over the life of the mortgage).

4. Top-up your TFSA
(if you are not carrying any extra debt then make your refund work for you. Contributing to a Tax-Free Savings Account (TFSA) can let you grow your money tax free. Even if you maxed out your TFSA contribution in 2009, you have room for an additional $5,000 this year).

5. Save for education
(an education can be an expensive thing. Contributing to a Registered Education Savings Plan (RESP) can help alleviate some of the pressure that all parents feel when planning for their children's future. Consider opening an RESP using your income tax refund. A $2,500 dollar contribution to an RESP can earn a $500 grant from the government. Maximize your contributions every year and you could earn up to $7,200 in lifetime grants for every child).

Bank of Canada says rate increase may be coming as soon as June 1st.

The Bank of Canada signaled Tuesday that a half point rise in the overnight rate could happen as early as the June scheduled rate announcement. Canadians may even be hit with a 1/2 point rate increase at the next announcement June 1st. The premature move, a month ahead of the scheduled July increase, is due to a stronger than expected economic recovery. A rate hike in June would position Canada 1st amongst the G7 countries to raise rates.

Click here to read the full article.