An extremely bold move was made by the Bank of Canada on March 4th, 2020 by slashing its key interest rate to 1.25%. In an attempt to keep the economy moving this drop was by 50 basis points. Not only has COVID-19 played a role, so has the winter weather, the rail blockades and the political climate.
With the interest rate drop, Home Buyers could see a significant savings. A $450,000.00 mortgage would have a rate drop to 2.1% meaning a savings of $115.00 per month, while an $800,000.00 mortgage would see a $200.00 per month savings. Although the Bank of Canada dropped to 1.125%, banks may choose not to pass this on to buyers because it means more profit to them.
Economists predict international markets will slow due to the impact of COVID-19. There is a large anticipated slow-down of the global economy which will impact foreign investments and the supply chain in Canada.
We will also see changes to the Mortgage Stress test in April. The rate will be the weekly median five-year fixed insured mortgage rates PLUS 2%. It’s a great time to cash in on a lower mortgage rate if you were on the fence about purchasing. It is also a great time to sell. Supply may drive housing prices up.
Give me a call if you’re thinking about buying or selling!