Mortgage Rates continue to be in a state of flux with COVID-19. Here is my latest (March 27, 2020) explanation of what has been happening.
Two weeks ago the Bank of Canada lowered it’s overnight rate by a half percent. This was the largest single day drop since 2008. Just over a week later on Friday the 13th, they did it again in an unscheduled rate announcement.
The major banks didn’t immediately follow suit, but as of today we have seen the banks pass along the full half percent rate drop again.
The Department of Finance announced Tuesday changes to the mortgage stress test. “The new benchmark rate will be the weekly median 5-year fixed insured mortgage rate from mortgage insurance applications, plus 2%.” This change is specific to insured mortgages (i.e. mortgages with a down payment of less than 20%) and takes affect on April 6.
The Bank of Canada announced this morning that the overnight rate has remained unchanged. The rate has been sitting at 1.75% for the last 12 consecutive months.
When the Bank released it’s monetary report in July the financial outlook for the country was weak. In this month’s monetary report the outlook is even weaker.
If you’re like most Albertans you’ve probably been feeling pretty pessimistic about our economy for the last few years. Thousands of people in the oil field have lost their jobs, the cost of gas has been attached to a yo-yo, and small business owners have struggled.
But at last week’s annual economic outlook meeting of Calgary Economic Development (CED), the reality of our many recent successes was made evident.
In May it was pretty certain that the Bank of Canada would not be making any changes to the overnight rate any time soon and the same remains true this month after their recent announcement. In fact, economists are projecting that it may be 2021 before we see rates rise again and more and more speculators agree that we’re going to start seeing cuts to the overnight rate.