Market update - Mar 2020

Michelle Feng

Mar 17, 2020

With the rapidly evolving COVID-19 outbreak worldwide, Bank of Canada (BoC) took the unprecedented measures of cutting the overnight rate twice down to 0.75% in a matter of less than ten days and the U.S. Federal Reserve (Fed) also dropped the benchmark rate on Sunday to near zero percent as an emergency move. The direct impact from these rate cuts will likely result in a much lower Prime Rate for commercial banks as well as sending fixed mortgage rates to historic low levels that we may have never seen before. Economists are predicting that BoC will continue to cut its rate to help counter the predictable concern about recession in Canada due to the global COVID-19 pandemic and the current crash in oil and gas prices.

On a positive note, borrowers who are currently in variable rate terms will enjoy some significant savings from the rate cut while fixed rate mortgage holders should review their current rate and consider renegotiating their contracts to seize the opportunity of long term savings from the historically low fixed rates we are experiencing. Most of our lenders took away deeply discounted variable rates last Friday due to the fast drop in the Prime Rate, however we still have a couple of lenders offering 1% off the Prime Rate for their variable products. I don’t think we will have them for too long before they are all gone.

Stay tuned for our more frequent rate updates during this volatile and challenging time and, please stay safe and healthy!