The Bank of Canada today announced it will be holding the key overnight rate at 0.25%.
In its release, the Bank reiterated that this was the lower limit for the overnight rate. It said that the ongoing COVID-19 crisis was the primary cause for holding the current rate. The Bank noted that while the economic impact of the in Canada crisis seems to have peaked, uncertainty remains high.
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Impact on the mortgage market
James Laird, co-founder of Ratehub.ca and President of CanWise Financial, says the current rate environment will likely stick around until economic conditions change.
“The Bank seems committed to maintaining the target for the overnight rate at its current level and continuing its current asset purchase program until the economy has recovered.
“The historically low mortgage rates currently in the market are here to stay until the economy approaches the level it was at before the pandemic started.
“This means that anyone with a variable rate can expect prime to remain unchanged. Fixed rates will stay near historic lows.”
Advice for consumers
If you’re thinking about getting a mortgage, today’s low rates may work in your favour. However, you’ll need to weigh up financial uncertainty in the market and your own situation. If you’re about to renew your mortgage, you’re also in a good position. However, switching lenders may require you to requalify, so you should consider whether your financial situation has changed during the crisis.
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