For the first time in over a year, the Bank of Canada announced that they’re lowering their overnight interest rate, and it’s a doozy: the rate target has dropped by half a percentage point to 1.25%.
The bank reported that despite the Canadian economy “operating close to potential” and inflation being right where they predicted it would be, the COVID-19 virus is affecting national and international market outlooks.
The virus has led to business activity falling sharply in some regions of the world, significantly disrupting global supply chains, which has brought down commodity prices and the Canadian dollar. The bank predicts that if the virus continues to spread, business and consumer confidence will deteriorate, further negatively affecting the global economy.
The Canadian economy grew by only 0.3% in the final quarter of 2019, bolstered by stronger consumption and healthy growth in labour income. Even though business investment and exports weakened in the quarter, residential investment grew at a moderate pace.
If you’re in a variable-rate mortgage, your monthly payments may drop. If you’re renewing a fixed rate mortgage soon, you could also get a lower interest rate than what you’re paying now.
The next rate update will occur in April.
If you want to know what options are available, are interested in renewing your mortgage to take advantage of the low rates, or want to find the best rate for you today, contact our office.