Finally A Rate Cut By Bank of Canada... And It's A Big One!   - Best Mortgage Broker Rates

Finally A Rate Cut By Bank of Canada... And It's A Big One!

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It’s been a long time in the making, but the Bank of Canada has finally cut their overnight rate!

This is something that was expected to happen as soon as spring of last year, but we were met with disappointment with each and every scheduled rate announcement since.

This is the first rate cut by the BOC since July 17th, 2015, so it’s been a long wait which we were due for. This is amazing news for anyone in a variable rate mortgage, as they’ll see a drop to their rate and payments.

Normally when the BOC cuts rate, they cut it by only 0.25%. In this case, they cut it by 0.50%!

This is extremely rare.

The question is whether or not the banks will match the full cut. They didn’t the last two times it dropped, responding with a cut of only 0.15% each time. We’ll know within a day or two.

Why Did Rates Drop?

The BOC has been incredibly reluctant to drop their rate, although there has been increasing pressure on them to do so. The negative impact from the coronavirus has now forced them to take action beyond the traditional 0.25% rate cut. Without the coronavirus, it was looking like the expected rate cut was not going to come anytime soon, if at all this year.

This Rate Cut Is Temporary

Since the biggest reason for the cut is the coronavirus, we can expect to see the BOC put rates back up once this is under control, so it’s likely that this drop will be temporary. This creates an opportunity for anyone requiring a mortgage within the next 120 days. I’m of course thinking positively, hoping that they will soon have the virus under control.

What This Means for Fixed Mortgage Rates

While these Bank of Canada interest rate announcements typically only affect those with variable rate mortgages or HELOCs, they can have an indirect influence on fixed mortgage rates. Fixed mortgage rates are heavily influenced by bond yields, which have been falling rapidly due to the coronavirus outbreak. Since the size of the rate cut came as a shock, bond yields are been driven further down. This puts additional downward pressure on fixed mortgage rates.

As of right now, there are currently 5 year fixed rates as low as 2.38% – 2.64%, depending on your situation. It is almost certain that we will see these rates drop further.

The next scheduled rate announcement is April 15th, 2020.

Paul Meredith is the author of the Amazon #1 best selling book, Beat the Bank

– How to Win The Mortgage Game in Canada, and has ranked as one of the top

75 mortgage brokers in Canada since 2016. He was a finalist for Mortgage

Broker of the Year in 2018, and can be seen as the exclusive mortgage broker on

season two of TV’s Top Million Dollar Agent.

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Paul Meredith is the author of the Amazon #1 best selling book, Beat the Bank – How to Win The Mortgage Game in Canada, and has ranked as one of the top 75 mortgage brokers in Canada since 2016. He was a finalist for Mortgage Broker of the Year in 2018 - 2021, 2023, and can be seen as the exclusive mortgage broker on season 2, 5-7 of TV’s Top Million Dollar Agent.(Global, Slice TV and Rogers)