The Bank of Canada has confirmed it may keep interest rates at their current lows. This means Canadian mortgage rates will likely also remain low until at least 2023.

In its January Monetary Policy Report (MPR) the BoC said it expects to keep overnight interest rates at equivalent levels to today, at 0.25 per cent, until 2023. With the prime interest rate responsive to this overnight rate it’s likely that it too will remain at a similar level, it’s at 2.45 per cent right now. Lenders set their mortgage interest rates against the prime rate of interest. So, the current low Canadian mortgage rates borrowers are benefitting from today could well continue for the next two years. 

Dr Sherry Cooper, Dominion Lending Centres Chief Economist commented on the news in her latest blog post:

“This is particularly noteworthy for two reasons: 1) some economists had been speculating that the Bank would lower the overnight rate by 10-to-15 basis points to help mitigate the impact of continued and broadening lockdowns; and, 2) others thought the early development of the vaccine would trigger sufficient growth to warrant a rate hike in 2022. In the Bank’s current view, neither is likely to be the case.”

A micro rate cut of 10-to-15 basis points may have led to a further reduction in what are already the lowest interest rates offered by lenders for a decade. Cooper adds “Why mess with a minute cut in already record-low interest rates when mortgage lending is still strong?”

Indeed, a combination of rising home sales, and low interest rates incentivising mortgage refinancing, is fuelling demand for new mortgages. 

DLC Northwest clients are taking advantage of low Canadian Mortgage Rates

Here at Dominion Lending Centres, Northwest, serving Terrace, Kitimat, Prince Rupert, and the Northern BC region, we’re seeing amazing demand. In the last six months of 2020 alone we helped 106 families with their mortgage needs. We funded over $36 million in mortgages for the region. 

Mortgage rates today are ultra low. As low as 1.30 per cent for variable rate mortgages on purchases and 1.60 per cent on mortgage refinances. Borrowers are now paying more off their principal balances, instead of mortgage interest, than ever before. 

A further micro rate cut could happen if the Canadian economy weakens. Bank of Canada Governor Tiff Macklem said recently:

“Reducing the effective lower bound from its current level of 25 basis points to a lower but still positive number is one of those options to provide additional monetary stimulus,”

Equally, if Canadian inflation returns to a sustainable 2 per cent and the economy shows a strong recovery from the effects of the Covid-19 pandemic we could see interest rates begin to rise once more.

Adam Coultish, expert Mortgage Advisor, Dominion Lending Centres Northwest, says

“The cost of borrowing the money to buy a house is expected to stay low. But, the price of housing, as we see, is increasing. The time is now to take advantage of property prices today combined with an ultra low interest rate.

For existing homeowners, refinancing a mortgage you have now means you will immediately start spending less on interest. Waiting to refinance could mean spending far more than is necessary.”

Thinking about taking advantage of the low Canadian interest rates we’re seeing today by purchasing or refinancing a home? Call Adam on 250-638-3302.