Unsurprisingly, the Bank of Canada announced last Wednesday that it will keep interest rates steady for the remainder of 2013 – with the target for the overnight rate sitting at 1%. This is, yet again, great news for variable rate mortgage holders.The prime lending rate hasn't changed for over three years.

The reasoning behind the Bank’s decision was pretty straight forward:

- Global economic growth is expanding as predicted – at a relatively modest rate. While some emerging economies have somewhat slowed down, growth in the U.S. made up for this by being stronger than expected. 

- In Canada, real GDP growth in the third quarter outperformed the Bank’s predictions by growing at a rate of 2.7%. The composition of this growth, however, was weighted more towards the housing sector and less towards exports and investments, which indicates we have a ways to go before it’s properly balanced.

While the Bank mentioned that the “downside risks to inflation seem to be greater”, it remains in the appropriate zone, hence the decision to keep rates the same. The next announcement will be on January 22, 2014.