The Bank of Canada declined to change its trend setting interest rate (aka “key policy rate” or “overnight rate”) on Tuesday July 15. It stands at 3.00% where it has been since April 22.

The Bank says that three major developments are affecting the Canadian economy at this time:

  • the protracted weakness in the U.S. economy;
  • ongoing turbulence in global financial markets (ie subprime mortgage fallout);
  • and sharp increases in many commodity prices.

The Bank says that the first two developments are evolving roughly in line with their expectations, however commodity prices are continuing to outstrip earlier expectations resulting in higher than desired inflation.

Bond yields have come down slightly as a result of the Bank’s announcement which may bring fixed mortgage rates down slightly in the coming weeks.

Current average mortgage rates are as follows:

Average Mortgage Rates - All Lenders
Updated: 12-Jul-08
  Current
(12-Jul-08) 		Change in Last Week Change in Last 4 Weeks
Variable Rate 4.35% 0.01 % - %
One Year, Closed 6.15% 0.00 % 0.01 %
Five Year, Closed 6.35% -0.01 % -0.02 %

Source data provided courtesy of Calgary Real Estate News

Click here for my weekly update of average mortgage rates.