With all the uncertainty we’re facing these days because of the virus pandemic, it’s nice to share some good news this week: Canada’s prime lending rate is falling to 2.45% after the Bank of Canada just announced another emergency rate cut.
On March 27, the Bank of Canada lowered its target for the overnight rate by another 50 basis points, bringing it from 0.75% to 0.25%. This was in addition to two earlier cuts in March of 50 basis points each. The latest reduction brought the prime lending rate from 2.95% to 2.45%.
This is obviously good news if you already own a home and you have a variable rate mortgage.
It’s also good news if your mortgage is coming for renewal soon, or if you have a line of credit with your bank or a home equity line of credit.
If you have a fixed mortgage rate, finance experts say it could be a good idea to contact your lender to do some calculations and to see if re-financing at a lower rate makes sense for you. Even with a fee for switching out of a current mortgage, it could be worth it if you will have substantial savings over your mortgage term.
If you think you will be shopping for a property soon, but have not yet pre-qualified for a mortgage, it’s also a good idea to contact your lender or a mortgage broker to do so. A mortgage broker can shop around for you and help find the lowest available rate for your financial circumstances, at no cost to you.
The rate you receive is typically guaranteed for three to four months.
The impact of the latest Prime Lending rate cut on fixed mortgage rates is still to be seen.
Ottawa mortgage broker Dan Faubert, who has helped many of my clients, said over the weekend that someone with a minimum mortgage of $300,000, who also meets the credit score requirements, could get a five-year fixed rate as low as 2.69%. But keep in mind that the rates change often.
Most mortgage brokers and banks are still open for business as we deal with the crisis, even if the staff are working from home or in closed bank branches. Dan says that those who would like to pre-qualify for a mortgage can do so electronically rather than an in-person appointment, as many people have been doing for several years already. Requirements include a letter of salary from your employer and a recent paystub. You can contact Dan for more information at 613-222-2624.
If you’re considering buying or selling property soon, you can read more about me on my site, www.nancybenson.com. Even if you are holding off on thoughts of buying or selling at the moment, I’m happy to chat about the local market and how we can proceed when things start returning to normal. Feel free to give me a call, at 613-747-4747.