We hope you are staying healthy and safe during these changing times. This morning the Bank of Canada reduced it’s prime rate by .50 basis points.
Here is the full report and the need-to-know facts: Bank of Canada
Next week we will learn what will be passed along to consumers – banks are all working together on liquidity and several other factors so this will be a wait and see scenario. If you have a variable rate mortgage enjoy the discount. Now is NOT the time to lock in. It could be awhile until you see the benefit of that as each lender has different policies, rest assured any discount that is applicable with your mortgage you will receive.
We often get asked, with all these cuts, should I break my fixed rate mortgage and go variable? Now is not that snapshot in time and here’s why. Lenders have eliminated their discounts off prime and the fixed rates today are better based on the math at this time. Only if you have a mortgage over 3.5 percent, want to access equity to pay out higher interest rate loans or if you are still working, you can access equity to put aside an emergency fund.
The Bank of Canada does not impact fixed rates, fixed rates are rising due to liquidity with reduced deposits on hand and adapting to deferrals.
If you have a renewal coming up or need to make a purchase – get a rate hold in place, then you can watch the market and decide. Once this is all behind us, many economists are predicting the fixed rates should dip down a bit. Only time will tell.
Not only do bonds impact fixed rates, but so does liquidity and cost of adapting to the present circumstances. With deposits lower with business shutting down and over 1 million people applying for EI last week alone, the banks don’t have as much deposits coming in and that’s why we have seen the cuts we have and other easing measures such as bond buy back etc.
Other changes this week include:
Scotiabank coming out to say they will now allow deferral on up to 4 properties regardless of occupancy – Scotiabank customers must contact Scotiabank directly for this Assistance for renters from BC housing for $500.00 (more on this at https://www.facebook.com/angelacallamortgageteam/). More to come on this Emergency Relief Fund for EI Insurers have banned together for purchases in the works prior to pandemic that are closing prior to Sept. 2020 (ACMT – Income Temporarily Interrupted).
Please reach out to us with any questions for you or someone you care about. Our response may be delayed, and our answers may change daily, however you can count on us to help anyway we possibly can. We will get through this together. firstname.lastname@example.org