On March 13, 2020, the Bank of Canada made a pretty big cut to interest rates. In their press release, they mention that: “this unscheduled rate decision is a proactive measure taken in light of the negative shocks to Canada’s economy arising from the COVID-19 pandemic and the recent sharp drop in oil prices”. The Bank of Canada lowered its target for the overnight rate by 50 basis points to ¾ percent, which was effective starting March 16, and then again on March 27…three times in one month! These lowered rates impact things such as savings accounts and mortgages, which could possibly mean good news and bad news to Canadian homebuyers.
In a nutshell, here is what you need to know:
- Because of the unexpected rate cuts, the changes to the mortgage stress test (changes which were supposed to take place on April 6, 2020) are now officially on hold.
- Despite these cuts which were intended to defend the impact the COVID-19 virus is having on the housing market, variable mixed rates and mortgage rates are actually increasing. This is due to the declining bank revenues and risk of defaults. According to Sherry Cooper, chief economist at Dominion Lending Centers, Canadian banks are under “enormous pressure” caused by disruptions from the virus outbreak.
If you need help navigating mortgages during this difficult time either for your primary residence or investment properties, I’m here to help! If you want to know if it’s the right time for you and your family to start shopping for a house, I can show you what your best options would be as well as assist those with a mortgage currently wanting to know if now is the time to make a change or not. The world is quickly shifting as we see the impact of the COVID-19 pandemic shift our global economy. Almost every industry (if not all industries) are facing many challenges during this time. Don’t let securing the right mortgage rate be a challenge for you. Call me today at (705) 315-0516 and I can answer all your mortgage and financial related questions virtually! I look forward to setting up an appointment and meeting with you on the web or over the phone soon. Stay safe everyone!