The Bank of Canada dropped its overnight rate down by 0.50% as a response to the global economic slowdown resulting from the Covid-19 crisis Bank Prime was at 3.95% and will be dropping to 3.45%.
For variable rate clients, you can expect to see your rate drop at the beginning of April.
Meanwhile, fixed rates are also dropping and we appear to be heading towards another stretch with extraordinarily low fixed rates.
There is some speculation from the economists we follow that we could see another rate drop as early as April, as a reaction to the very recent struggles in the oil & gas sector Some economists project -0.3% GDP for April to June this year, which would put us in a similar position to the last dip in the market circa 2015 (Fort McMurray fire). Bank Prime went as low as 2.70% during that stretch.
What Should You Do?
Variable Rate clients – Most of our variable rate clients will want to take the ride down with the variable rate until their mortgage comes up for maturity since they could drop well below 2.00% for a stretch of the next two years. We had a 2-year stretch of hikes, so you should enjoy the drops.
That said, there will be some clients who should consider locking in while fixed rates are at the bottom. If you are settled into your home with no renovations, debt to pay out or any chance that you will move in the next 5 years, please give us a call and we can help you investigate your lock-in options.
Fixed Rate clients – This is actually the rare occasion where we may see some fixed rate clients break their mortgages in order to take advantage of low rates.
If you are considering renovations or debt consolidation in the next 12 months, this is absolutely the time to look at that. Refinance rates are very low and with the recent growth in the real estate market, there will be equity in most homes to borrow against.
Renewal clients – All looking at renewal in the next 6 months should reach out to Steve, Chris or Boyce to discuss your options. The initial offer that you receive is rarely the best offer and we always love to hear from you!
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