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Bank of Canada announcement – What’s better: Variable vs fixed-rates – October 27, 2021 as heard on CityNews 95.7

Clinton chats with CityNews 95.7 host, Todd Veinotte about the Bank of Canada announcement. The bank held the key overnight rate at 0.25 per cent and Clinton and Todd discuss what this means for those in a variable or fixed-rate product, along with what consumers should expect with these products in the coming year.

Bank of Canada Announcement – October 27, 2021 as heard on CityNews 95.7

Don’t feel like watching the video? Check out the transcript below.


No change: Key overnight rate stays at 0.25 per cent.

Todd Veinotte: [00:00:00:05] Alright. The Bank of Canada has made its decision on interest rates, no changes. Joining me to talk about all of this is our mortgage guru, Clinton Wilkins, Clinton, hello!

Clinton Wilkins: [00:00:11:28] Hi, Todd. How are you doing?

Todd Veinotte: [00:00:13:07] I’m well, you?

Clinton Wilkins: [00:00:15:12] I’m doing great. You know, it’s October 27th, and no change to the Bank of Canada key overnight rate, which is, I think, great news for Canadians.

You know, inflation certainly is a concern. And I think even some of your previous listeners we’re talking about, you know, housing supply and, you know, cost of living here in Halifax. You know the country is experiencing issues, you know, really from coast to coast.

You know, we’re not in a little micro area that’s just, you know, one place having some challenges. I think it’s certainly topics that are being discussed by all levels of government.

Increases to the rate are inevitable

Todd Veinotte: [00:00:54:28] I think it’s eventually, the Bank of Canada, it’s inevitable, though, with inflation doing what it’s doing, they’re going to have to raise the rates. That’s what I’ve been hearing.

Clinton Wilkins: [00:01:04:12] Yeah, eventually they’re going to raise it. You know, some economists were saying that, you know, we may start seeing some slow burn as early as late next year. You never know. They may see some increases, you know, in the coming months and quarters if the inflation keeps on going up.

I read an article today that an economist put out to say that the inflation is really at the highest point that it’s been in the last 18 years. You know, obviously, Todd, that’s a symptom of, you know, the government pumping out all of the resources and all the funds that they have over the last, you know, 19 months since the pandemic started.

Todd Veinotte: [00:01:43:08] Yeah, I’ve heard that it’s going to be sooner than that. I’ve heard that they could raise rates in their next announcement.

Clinton Wilkins: [00:01:49:12] Well, the next announcement is December 8th, so that might not be a great holiday gift for some consumers. Obviously, any consumer that has a variable-rate mortgage or a home equity line of credit or any, you know, liabilities that are tied into the prime rate would obviously be impacted. For me, I think it’s a little bit of a wait and see.

Variable-rates vs fixed-rates

Historically, consumers do better in a variable-rate mortgage product, Todd. I’m a big believer in it. You know, we’re on the radio every time the Bank Canada meets and obviously giving our perspective and fixed-rates certainly have increased, and I think that’s putting a little bit of pressure on consumers.

You know, I think there’s a little bit of uncertainty. You know, the fixed-rates today are higher than they have been even pre-pandemic times. So, you know, we’re certainly seeing a spike in that and, you know, they move independently of each other. And I think the variable-rate is still a great choice for a lot of consumers.

Right now for a variable-rate type product, consumers are looking at rates that are in the low one per cent range, Todd. So there certainly is some room to grow when you’re looking at a fixed-rate product that’s, you know, one per cent one and a half per cent higher than where the variable is. I think that many consumers can take the risk if they have the stomach to take it. And, you know, I think that’s one thing that, you know, consumers really need to think about.

And I think this announcement and kind of what that Bank of Canada is saying, there’s going to be increases. But you know, those increases, I think, are going to be decisions that are going to obviously impact the bottom line. Maybe your payment, but is it going to be cheaper over the period of time? You know, our consumers certainly think so.

Today, we’re still obviously, you know, many consumers are taking a variable-rate. So I think it’s going to be a little bit of wait and see. But I’m interested to see what’s going to happen in December.

November is Financial Literacy Month

Todd Veinotte: [00:03:52:00] Right, and of course you and I will be talking about this in a lot of other things when we are on the air on the weekend, right? Tee that up.

Clinton Wilkins: [00:03:58:26] That’s yeah, that’s right. We’re going to be on the air this Saturday and Sunday. So if you’re driving around and getting ready for Halloween, you can certainly listen to our show here on CityNews. We’re going to be kicking off Financial Literacy Month and November is Financial Literacy Month. Obviously, we want to bring attention to that. I think it’s a really important thing.

And, you know, the Financial Consumer Agency of Canada, you know, created it 10 years ago to really bring awareness to Canadians around, you know, financial, health and wellness. And you know, we really believe the mortgage is a big piece of that pie for Canadians. Obviously, if you own a house, it’s your biggest purchase. Oftentimes, it’s your biggest asset.

And we’re going to be bringing in some special guests this month. We’re going to be having some live shows throughout the month, and we’re going to be obviously doing our kick-off here this weekend and we’re going to be doing another hour show at the end of November. So hopefully lots of great content.

And you know, if any of your listeners, Todd, want us to discuss anything specifically around financial literacy, feel free to, you know, send Todd a message or send me a message, and we’d love to talk about it. I think there’s going to be lots of great content and we’ll do some deep dives into things like income, assets and credit and obviously, homeownership.

Todd Veinotte: [00:05:16:05] Thanks, Clinton. We’ll be chatting soon. Thanks a lot.

Clinton Wilkins: [00:05:19:17] Thanks, Todd. Have a good day.

Todd Veinotte: [00:05:20:24] All right. Take care. Clinton Wilkins, our mortgage guru.

If you have any questions, get in touch with us at Clinton Wilkins Mortgage Team! You can call us at (902) 482-2770 or contact us here.