Bank of Canada Rate Announcement March 2020

Today the Bank of Canada made their second scheduled rate announcement of 2020 and as widely speculated they opted to cut the key interest rate. The bank has made an aggressive move by cutting 50bps taking the key interest rate from 1.75% to 1.25%. The bank has also stated that it is ready to adjust monetary policy further if required.

What were the Bank of Canada’s Reasons to decrease the overnight rate?

The bank has listed several reasons to justify its decision to lower the key rate all of which are indicating a slower economy both domestically and worldwide. I have listed the top four points below.

• Covid – 19 is a “Material negative shock” to outlook

• Outlook is “Clearly weaker” now than it was in January

• Rail Blockades, Strikes, Winter Storms hurting q1 growth

• Business and consumer confidence likely to weaken further

You can read the official report here

What does this mean to homebuyers?

The cut to the key interest rate combined with the relaxed stress test rules for insured mortgages could indicate great opportunity for buyers. These potential oppurtnities could impact those required to purchase with less than 20% down payment as they will have a little more qualification power combined with lower interest rates.

Now is a great time for first time buyers to review their options and determine if spring 2020 is a good time to enter the housing market.

The next Bank of Canada interest rate announcement will be Wedensday April 15.

I am always available to discuss your situation it only takes a few minutes to determine what your options are. Please do not hesitate to reach out to me I am a call or click away.