The Bank of Canada announced in a press release earlier this morning that they have cut its overnight lending rate by yet another half a percentage point, lowering it to 0.25 percent in response to the escalating COVID-19 crisis. This is the third rate cut in a matter of weeks. Prior to today’s cut, Canada’s central bank rate was the highest in the developed world at 0.75 percent. The last time the central bank cut rates to these levels was during the 2009 global financial crisis.
In a press release, the Bank of Canada said, “The spread of COVID-19 is having serious consequences for Canadians and for the economy, as in the abrupt decline in world oil prices.” This is in addition to major Canadian banks offering homeowners whose income and employment have negatively been affected by this pandemic the opportunity to defer mortgage payments for up to 6 months.
Adding, “The intent of our decision today is to support the financial system in its central role of providing credit in the economy, and to lay the foundation for the economy’s return to normalcy.”
The rate cut is big news for people with mortgages in Canada as it could result in reductions to mortgage rates. While no concrete numbers have been released yet from Canada’s lending institutions, it’s only a matter of time, and I suspect that rates will likely be lowered over the next few days.
If rates go down even further, this would be a great time for you to refinance your mortgage to take advantage of the lower interest rates, or to take out extra cash from your home equity to help with finances, for paying bills, or for consolidating debt during these challenging times.
If you have any questions about the rate cuts and its impact on your mortgage, feel free to reach out to a mortgage specialist at Clover Mortgage either by phone at 416-674-6222 or by email at email@example.com.