Interest Rates Cut Amidst Virus Concerns
The Bank of Canada’s decision to go ahead and cut the primary interest rate this week will further fuel the fire around Canada's crazy real estate markets, as seems to be the consensus amongst both mortgage and real estate industry experts.
From all angles it looks like its going to be an unexpected and very busy year in the mortgage market, that is until of course there is a serious breakdown in the economy, which very well could still be the case depending on how bad and how long the economic situation being caused by the corona actually lasts.
If the data from the economy next quarter starts to show unemployment tick half a point or so higher, then all bets are off for stability in the mortgage outlook for the rest of this year. For the foreseeable future however, these unbelievably low rates are going to dramatically affect the housing and real estate market as chartered banks typically follow the central bank’s lead.
With this very unorthodox situation we are currently facing it is going to be interesting to see if the country’s leading lenders rush to also slash their mortgage rates. Generally, they don’t cut mortgage rates right away but in this case it is highly likely rates will come down a bit in the short-term.
The banks will likely keep some of their powder dry so to speak, but we have not really ever experienced an economic situation like this, so all bets are on to see exactly what happens in the next 6 months or so.