The Bank of Canada today announced it will be holding the key overnight rate at 0.25%. Last month, the Bank flagged this as the lower limit for the rate.
The Bank says it is committed to maintaining the current rate and monetary policy until the majority of the recovery from the COVID-19 pandemic has occurred. It has reiterated that we are at the lower bound and should not expect rates to go lower.
James Laird, the co-founder of Ratehub.ca and President of CanWise Financial mortgage brokerage, says today’s announcement sees the bank improve its outlook for the Canadian economy.
“The Bank seems optimistic that the worst of the virus is behind us and that Canada and the world have started along the path to recovery”, James says.
“The Bank seems to be expecting the economy to rebound in the second half of 2020 and throughout 2021.”
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Impact on borrowers
As with last month’s decision to keep rates steady, today’s announcement means we will likely see the low rate environment continue, which James Laird says is good for borrowers.
“This announcement should give Canadians confidence that both fixed and variable rates will remain near their current historic lows until the economy is back to pre-pandemic levels.
“As the real estate market continues to rebound, competitive pressure between mortgage lenders is causing both fixed and variable rates to inch down on a continuous basis.
“For Canadians currently shopping for a home, they should get a pre-approval to lock in today’s rates for up to 120 days. Anyone with a mortgage coming up for renewal or who is considering a refinance should shop around to take advantage of the historically low rates.”