Here is our first decrease in the Bank of Canada prime rate for 2020. Here is the full report from today Bank of Canada and the next meeting is April 15th 2020.
What does this mean for consumers?
Since 2016, lenders started breaking the norm in terms of discounts being passed along to consumers as they were keeping larger cuts for themselves to help with the reduced revenue due to the new mortgage rule changes and speculation taxes coming into place. I have written in detail about this in my book The Mortgage Code which helps provide clarity on how lenders operate and how to use it to your benefit.
I suspect that while the Bank of Canada generally does .25 per cent increases or decreases, we will only see a .15 or point.10 discount once the banks decide what to do with their prime as a result that will reduce the cost of mortgages and lines of credit. More to come on this.
An important metric to keep in mind is that every 5 basis points in mortgage amount per $100,000 is $3 a month in difference.
For example, a .25 basis point decrease on a $350,000 mortgage would be $50 a month in reduction. A .15% decrease works out to $30 a month decrease.
While the BOC prime is key in determining bank prime, one thing to keep in mind is fixed rates are at record lows. Economic uncertainty means the cost of borrowing money will remain low.
To optimize the market to your advantage consider this:
1. If you’re thinking of a home purchase, get a pre-approval in place. You can start with our app and complete the process after review https://www.dlcapp.ca/app/angela-calla
2. If you have a mortgage rate over 3.5%, let’s review to see what the numbers would be with your specific scenario to see if a modification would benefit you to secure a lower rate for a longer period of time. If you are in a variable- let’s review your options for discount vs fixed.
3. If you have debt outside of your mortgage, let’s review if it’s advantageous to add that into your existing mortgage.
4. If you have a mortgage renewal coming up, get the rate held and watch the market until three weeks before completion to see what options become avaliable.
Please remember, if you have a mortgage funding with us in coming weeks, we do a full lookback prior to closing to ensure you have the lowest cost of borrowing for your circumstances.
My team is here to help you navigate this ever changing market. We can help you or a loved one today at 604-802-3983 or callateam@dominionlending.ca. Follow our facebook page for more news; Facebook – Angela Calla Mortgage Team
