Bank Of Canada Emergency Rate Cut
We have seen some major developments in the Canadian mortgage market in the last week in a response to the Covid-19 epidemic, most notably Friday the Bank of Canada made another emergency rate cut bringing the key lending rate down to 0.25%, the major Canadian banks have followed suit and dropped their prime rate to 2.45%. This change will again affect all existing Variable rate mortgages, as well as Line of Credit products.
The key lending has now fallen from 1.75% at the start of the month to its current rate of 0.25%, the last time the overnight rate fell so much in the span of of a month was in 1992.
Questions on whether we we would see negative interest rates were answered Friday when Friday Stephen Poloz from the BOC confirmed the bank would not drop interest rates into negative territory saying “this unscheduled rate decision brings the policy rate to its effective lower bound”
The current forecast is for the key rate to stay at 0.25 with no further changes through 2020/2021
With the market in uncharted waters I am still dedicated to providing the best possible to support to your and your clients, if you have any questions or if I cast be of any assistance please do not hesitate to reach out.