March 16, 2020
How the Bank of Canada’s Change Will Save You Money
Written by Steven Tulman
It has been a busy 2 weeks in the markets. On Friday afternoon March 13, 2020, the Bank of Canada announced new emergency measures to help ease the economic stress to Canadians and the overall Canadian financial system that has been caused as a result of the Corona Virus (commonly known as the COVID-19) pandemic.
Here are some of the measures the Bank of Canada took to help:
- Effective today (Monday, March 16, 2020) the bank of Canada’s overnight lending rate was reduced by yet another ½% to 0.75%.
- The government also stepped in and introduced a decrease in the DSB (Domestic Stability Buffer) requirement for systemically important Canadian banks. This comes with the intention to help make available over $300 Billion for lending to the economy during this national pandemic to help the Canadian economy sustain itself.
- The Business Credit Availability Program was also introduced to help provide support to Canadian businesses in excess of $10 Billion in collaboration with the BDC (Business Development Bank of Canada) and Export Development Canada.
- Additional measures, such as the Bankers’ Acceptance Purchase Facility, were taken to help support and fund small and medium sized businesses across Canada during this tough financial period.
What does this mean if you’re looking for a mortgage in Canada or a home refinance in Canada?
The mortgage rates have already dropped since the Bank of Canada’s announcement to reduce lending rates earlier this month, and we expect even more rate decreases in the weeks to come from many of Canada’s top mortgage lenders.
When it comes to qualifying for a mortgage, the Bank of Canada will be reviewing it’s qualifying stress test rate in April and will be providing a complete update of where they stand on the current economic state of Canada on April 15, 2020. There is a big feeling of confidence across the mortgage and lending industry in Canada that the stress test rate will be lowered making it easier for Canadians to qualify for a mortgage, a higher home refinance, and to receive better and lower mortgage rates.