Bank of Canada governor Stephen Poloz has given a strong hint that there will be no further interest rate cut in the near future. Speaking in New York Mr Poloz said that the January cut of 0.25 per cent seems to have done the job the bank wanted; insuring against the oil price slide. With oil prices holding more steadily for now it is looking unlikely that there will be a reduction from the 0.75 per cent current rate. The governor also said he expected a bounce back in the economy in the second quarter after a weak start to the year.

Despite a “stalled” economy in the first quarter of 2015, the Bank of Canada revealed some optimism as it held steady the target for the overnight rate.

“Risks to the outlook for inflation are now roughly balanced and risks to financial stability appear to be evolving as expected,” the Bank of Canada wrote in an official release. “The Bank judges that the current degree of monetary policy stimulus remains appropriate and therefore is maintaining the target for the overnight rate at 3/4 per cent.”

The total CPI inflation is at one per cent, due to a drop in consumer energy prices and core inflation has hovered around 2 per cent over the past few months, according to the BoC.

“The Canadian economy is estimated to have stalled in the first quarter of 2015,” the Central bank wrote. The Bank’s assessment is that the impact of the oil price shock on growth will be more front-loaded than predicted in January, but not larger.”

The BoC also stated it will continue to monitor the impact oil price shock will have on the economy. However, it is expecting a the economy to rebound in the coming months.

“As the impact of the oil shock on growth starts to dissipate, this natural sequence is expected to re-emerge as the dominant trend around mid-year,” the BoC wrote. “Real GDP growth is projected to rebound in the second quarter and subsequently strengthen to average about 2 1/2 per cent on a quarterly basis until the middle of 2016. The Bank expects real GDP growth of 1.9 per cent in 2015, 2.5 per cent in 2016, and 2.0 per cent in 2017.”

It’s a different tune than the one sung in January, when the Bank of Canada shocked the country by cutting its long-held rate by ¼ per cent.

When the Bank of Canada releases its latest monetary policy report this week mortgage lenders will be looking for any hints that could suggest an interest rate cut. It’s been three months since the last one but since then there has been a more cautious approach to further cuts. Most experts are not expecting this Wednesday to bring good news for borrowers; the bond markets for example are only factoring in a 10 per cent chance of a cut. The policy may be more revealing as the central bank weighs the continued weakness in the oil industry and sets out its forecast for the wider economy. There is little consensus on whether further interest rate cuts will be required and even less on when and how fast they might happen; this week’s report may provide some clues.

If you plan to buy a home with less than 10% down and get CMHC insurance, get ready to pay another $450 per $100,000 of mortgage.

That’s what CMHC’s just-announced premium hike amounts to.

It’s the second time in about a year that CMHC has raised its fees on homeowners. The new premiums are a 14-15% increase over today, or 31% if you compare them to CMHC’s fees last year.

CMHC’s move targets only those putting down less than 10%, which amounts to 56.8% of CMHC-insured borrowers, as of CMHC’s latest reported quarter. The company says the decision is not because of an increase in borrower risk.

“For the average Canadian homebuyer who has less than a 10% down payment, the higher premium will result in an increase of approximately $5 to their monthly mortgage payment,” the agency said in its release today.

“CMHC completed a detailed review of its mortgage loan insurance premiums and examined the performance of the various sub-segments of its portfolio,” said SVP of Insurance Steven Mennill. “The premium increase for homebuyers with less than a 10% down payment reflects CMHC’s target capital requirements which were increased in mid-2014 (to 220% of the minimum OSFI requirements).”

We’ll probably know by next week if Genworth and Canada Guarantee follow CMHC’s lead. They did last time and there’s a fair chance they will again. A Genworth spokesperson said, “We are reviewing [CMHC’s announcement] and expect to release our official announcement early next week.”

Some quick notes for homebuyers:

• If your loan-to-value is over 90% and your lender submits your complete application to CMHC before June 1, 2015, you’ll       pay the old (cheaper) CMHC fees. It doesn’t matter when your mortgage closes.

• Submitting a pre-approval as opposed to a complete application will not hold the old insurance premiums.

• If you borrow your down payment, the fee is another 5 basis points (0.05%) higher, or 3.85% of the mortgage amount.

• If you live in Manitoba, Ontario and Quebec, you also have to pay provincial sales tax on your default insurance. That sales   tax cannot be rolled into the mortgage.

If you want to get a loan or apply for a mortgage, your credit score is everything. That’s because it tells lenders how creditworthy you are. A low score means you’re more likely to fall behind on your debts. You’ll have a hard time qualifying for new credit, and even if you do, you’ll likely be hit with a super high interest rate. High scorers get the best rates on new credit because lenders can reasonably assume that they won’t flake out on their payments.

That being said, do you really know how you score is calculated?

To simplify things, we’re going to dive into the FICO score, which ranges from 300 to 850 and is the one most commonly used by lenders today. Once you know what factors go into your score, it’s much easier to understand what kinds of moves you should make if you want to improve your score.

There are 5 main factors that determine your FICO score:

Payment history. If your credit score was a pie, the biggest piece would belong to payment history. It accounts for 35% of your score. That means making on-time or late payments on all your credit accounts can really make or break you.

Debt balance. The next piece is how much debt you owe — it makes up 30% of your score. Credit companies really like people who use less than 30% of their available debt limit. That means if you’ve got three credit cards with a total credit line of $10,000, you don’t want to ever carry a balance of more than $3,000 at once.

Length of credit history. 15% of your score is determined by how old your credit history is — in general the older your accounts are, the better it is for your score.  But  even people who haven’t been using credit long can have high scores, depending on how good the rest of their credit report is, according to FICO.

New credit applications. Applying for new credit takes up 10% of the pie. If you apply for new credit every other month, that sends a red flag to credit bureaus.

Types of credit. As for the types of credit you have, this constitutes another 10% of your score. It’s better to have low levels of revolving debt like credit cards and more kinds of non-revolving debt like a car loan or student debt. It just makes you look less risky.

Now that you know how your score is calculated, you’d probably like to know how to see your score as well. It costs about $15 to get your score from MyFico.com. If you don’t want to pay up, some credit card companies have been adding credit scores to their customers’ accounts as a kind of bonus. Barclaycard, First National Bank and Discover each provide the FICO score for free.

There are also plenty of free ways to check your credit score estimate online through sites like CreditKarma, Credit.com, Quizzle or Credit Sesame.

Just keep in mind that these sites don’t give you your actual FICO score. They base your credit score on your credit history from one of the three major credit bureaus and then use their own algorithms to generate an estimate of your score. For example, Credit Sesame offers the Experian National Risk Score, which is based on data collected by Experian only. Similarly, Credit.com bases its free score on Experian data, offering both a VantageScore 3.0 and Experian credit score. Quizzle leans on Equifax data. CreditKarma offers scores based on Equifax and TransUnion data.

Unless you’re a brand loyalist, this shouldn’t concern you too much.  Your scores will undoubtedly vary across these platforms because no two services use the same math to get your score. However, rather than focusing on matching up your scores, look at where your score falls in the credit risk range. Each site has its own version of a chart that tells you whether your score makes you a poor, good, or excellent candidate for credit. No matter which site you use, your score should land you close to the same range in each. If one score is totally out of whack, it’s a sign that there may be something fishy going on and you should review your credit history with that particular bureau.

 There has been much speculation since the Bank of Canada’s surprise rate cut in late January, but have the predictions come true?

 Following the last cut on January 21, many big banks predicted a further cut would be made today, but the Bank of Canada has moved to maintain the rate at ¾ per cent, citing improved economic conditions since that last move.

 “Financial conditions in Canada have eased materially since January, in response to the Bank’s recent monetary policy action and to global financial developments,” an official release from the central bank states. “This easing is reflected across the yield curve and in a wide range of asset prices, including the Canadian dollar. These conditions will mitigate the negative effects of the oil price shock, further boosting growth through stronger non-energy exports and investment.”

 Prior to the announcement, a Bloomburg news poll revealed 18 of 23 economists polled believed the BoC would hold the rate at 3/4 per cent.

 However, in early February, several of the big banks predicted a further cut.

 “The Bank of Canada assumed upcoming weakness in the economy when it cut rates last week. Although its focus is on 2015, with growth in Q4 now set to come under its 2.5 per cent forecast, the BoC has all the more reason to cut again in March,” CIBC stated in its Economic Flash report published in early February.“The downdraft from oil will indeed be significant, but overall output’s response to cheaper fuel, lower rates, and a significantly weaker Canadian dollar means that our full-year growth target for 2015 is still around the economy’s potential.”

 The report came on the heels of a similar prediction made by TD Bank, who also predicted a further rate cut to come from the Bank of Canada at its next rate announcement.

 “The Bank of Canada unexpectedly cut the overnight rate by 25 basis points in mid-January, on the negative impact of lower oil prices on inflation and the real economy. At that time, it also signaled that it saw most of the risks to inflation to be tilted to the downside,” TD’s economic update, published in late January stated. “Given our weaker oil price, inflation, and output forecast relative to the Bank, it therefore holds that we expect some of those downside risks to be realized.

 “As such, we forecast that the Bank of Canada will cut the overnight rate by an additional 25 basis points at its next fixed announcement date in March.”

 However, the Bank of Canada now believes the risks around inflation are now balanced and it deems the “current degree of monetary policy stimulus is still appropriate and the target for the overnight rate remains at 3/4 per cent.

Bank of Canada governor Stephen Poloz gave a speech at Western University yesterday but although he referred to the recent interest rate cut he was not giving any clues as to the next move. He said that we are in uncertain economic territory and that the recent 0.25 per cent cut was necessary to balance falling inflation with high household debt, with both at risk from the lower oil prices. The BoC will announce its decision on interest rates next week (Mar. 4) but Poloz did not give an indication on the current thinking; many economists are banking on a further 0.25 per cent cut.

The tighter lending restrictions introduced in 2012 may have had unfortunate consequences. The rules were viewed as an attempt to cool the Toronto and Vancouver markets but a report suggests that smaller cities have felt the impact. Cutting the maximum length of mortgage insurance amortization to 25 years from 30 has put off some first-time buyers resulting in a glut of unsold condos in cities such as Winnipeg, Montreal and Moncton. The Globe and Mail reports that in Quebec there was a boom in condo purchasing in the year preceding the tighter rules on mortgages with a third of buyers taking out loans with 30 year amortizations while in Montreal 40 per cent of buyers did so. Paul Cardinal, manager of market analysis for the Quebec Federation of Real Estate Boards says that the restrictions had a similar effect on the market as raising interest rates by one percentage point.

More experts are joining the voices calling for a further cut in interest rates when the Bank of Canada announces its decision next month. The bank’s senior deputy governor Carolyn Wilkins said yesterday that “the economy still has room to grow” and that the bank’s monetary policy will “support the needed adjustments.” She said that the economy needs to adjust to the lower oil prices and that the bank doesn’t want to do anything that could stifle that. The labour market is one of the main areas of concern, especially with lay-offs in the energy sector, along with output and Ms. Wilkins believes that the gaps will close over time. She says that low and stable inflation will help boost investment and prompt the creation of more jobs. The Bank of Montreal’s senior economist Benjamin Reitzes says that we should “Look for another rate cut in March, and don’t count out further easing.” The rate decision will be announced on Mar. 4

One big bank has offered an explanation for why its prime rate doesn’t match the Bank of Canada’s overnight rate, but brokers aren’t exactly sold.

“For years it was always if the Bank of Canada drops its rate by a quarter point, you’d see prime drop by a quarter point, but I think it really caught everyone by surprise that they actually dropped it because there was talk for the past year that the rate was going to go up and prime was going to increase,” Al Roberts of Dominion Lending Centres The Roberts Group told MortgageBrokerNews.ca.

The Bank of Canada lowered its overnight rate by 25 basis points last week and the banks have all lowered their prime rates by 15 basis points. It took the banks almost a week after the central bank lowered its overnight rate to slash their own prime rates.

According to one analyst, the decision not to match the overnight rate was done to ensure a healthy economy.

“The absence of a full prime cut slows the stimulus into the housing market late in the cycle while the negative impact on Canadian bank profitability is dulled by the fact that it is only a partial move,” Robert Sedran, analyst at CIBC World Markets said in a note to clients, according to the Financial Post. “We’ll see if this balance holds or if another cut in the overnight rate is coming.”

The delay – and the refusal to match the benchmark rate – is viewed by some as a bid to maintain the highest possible profits.

Others, however, think it’s a subtle push-back by the banks that were caught off guard by a central bank that unexpectedly slashed its rate – a move that caught many, including most Canadian economists, off guard.

“On the one hand they’re milking (clients) on the other hand they have never seen this situation before; they were caught by surprise by the bank lowering its rate and them refusing to match it could be a case of the banks pushing back a bit,” Micheal Kafenzakis of Verico Groupe Conseil Hypotheque told MortgageBrokerNews.ca. “In my forty years of experience, usually when the government drops their rate the banks follow. I suspect in the months ahead, they’ll come around and bring their rates down (to match the Bank of Canada rate). Otherwise they’re just gouging.”