2020-08-04 | 17:46:58

We are now in the sixth month of the global COVID-19 pandemic, and while there are still so many uncertainties that lie ahead, one thing you do not need to worry about is rising interest rates.

During March, the Bank of Canada slashed the overnight rate by 1.50% in an effort to stabilize the economy. Therefore the bank prime rate now sits at 2.45%. This is great news for clients in a varaible rate mortgage.

Stephen Brown of Capital Economics wrote last week that "The Bank of Canada's pledge today to keep the policy rate unchanged until the 2 percent inflation target is sustainably achieved implies that it has no plans to raise interest rates until at least 2023."

BMO Senior Economist Robert Kavcic wrote an article recently that stated "In case it's not clear, we're talking years here, not months or quarters" before interest rates will rise.

Based on the current outlook, I have three specific recommendations for my clients at this time:

1/ If you are in a variable rate mortgage - stay there! Enjoy your sub 2.00% rate.

2/ If you are in a fixed rate term of 2.70% or lower, ride it out and hopefully rates stay low until your renewal date. If this recommendation changes I will let you know.

3/ If you are paying more than 2.70% on a fixed rate, call or email me and I will do the math to see if there is a savings opportunity. In some cases the resulting interest savings will far outweigh the penalty to switch mortgages.

Stay safe and enjoy the rest of your summer.

Cheers,...Patrick