Well that was unexpected... Here we go again! 

Here's the highlights:

For everyone wondering how this will impact current mortgage rates, here's the highlights:

  • This is ANOTHER 0 .5% drop to the bank of Canada's 'overnight rate'.
  • The 'overnight rate' is a rate that is used to influence bank's/lender's 'Prime Rate', which is used to calculate variable mortgage rates.
  • Because the bank's 'Prime Rate(s)' will likely drop AGAIN (read: should drop), we will see that variable rates will follow down.

So for those of your who currently have a variable rate mortgage OR are thinking about signing up for one; your rate is about to get better. Exactly how much better remains to be seen, but we should get a better grasp on the exact numbers later on today.

Depending on your mortgage company, this might mean either a drop to your regular payment (your bank/lender will notify you of this) OR it means that more of each payment will go to principal, if your payment remains the same. This is good news for most people in either case.

As always, don't ever hesitate to call or email me if you want to discuss how this impacts you. I'm always here to help!

From the BOC themselves:

The Bank of Canada today lowered its target for the overnight rate by 50 basis points to ¾ percent, effective Monday, March 16, 2020. The Bank Rate is correspondingly 1 percent and the deposit rate is ½ percent. This unscheduled rate decision is a proactive measure taken in light of the negative shocks to Canada’s economy arising from the COVID-19 pandemic and the recent sharp drop in oil prices.

It is clear that the spread of the coronavirus is having serious consequences for Canadian families, and for Canada’s economy. In addition, lower prices for oil, even since our last scheduled rate decision on March 4, will weigh heavily on the economy, particularly in energy intensive regions.

The Bank will provide a full update of its outlook for the Canadian and global economies on April 15. As the situation evolves, Governing Council stands ready to adjust monetary policy further if required to support economic growth and keep inflation on target.

The Bank has also taken steps to ensure that the Canadian financial system has sufficient liquidity. These additional measures have been announced in separate notices on the Bank’s website. The Bank is closely monitoring economic and financial conditions, in coordination with other G7 central banks and fiscal authorities.

Information note
The next scheduled date for announcing the overnight rate target is April 15, 2020. The next full update of the Bank’s outlook for the economy and inflation, including risks to the projection, will be published in the MPR at the same time.