As scares of COVID19 rises, and social distancing starts to feel like a normal every day, the 5 major banks have all cut their interest rates again. Royal Bank of Canada, Toronto-Dominion Bank, Bank of Nova Scotia, Canadian Imperial Bank of Commerce and Bank of Montreal have cut their prime lending rates 50 basis points to 2.45 per cent from 2.95 per cent in a move matching the Bank of Canada’s latest interest rate cut.
It’s the third significant cut to the prime rate in less than three weeks, following a pair of 50 basis point cuts on March 16 and March 5. For a lot of us looking to close on a house, looking to renew a mortgage and in general help us cut cost during these difficult times this will be a breath of fresh air. Your month mortgage bill will be at a all time low rate, if you can jump on this!
The prime rate underpins a slate of variable-rate loans, including mortgages, and thus impact the cost of borrowing for a range of financial products. If you already have a variable rate, give yourself a pat on the bank, your rates and payments are going DOWN! If you are someone that is looking to secure a mortgage seems like variable is the correct way to go from here on out until something changes.
The current sought after, Variable rate.
Variable rates are a fluctuating rate that is based on the Prime rate of Canada and fluctuates if the prime is + or -. Currently from March 31st the prime rate is 2.45% for most banks except TD (2.60%). Fixed rates are more or less staying the same, but variable is always fluctuating. For potential buyers and mortgage applicants, you maybe able to catch a variable rate very low as the banks are continuing to make adjustments. For example there was a moment last week when some variable rates were Prime -.50, meaning 2.45-.50 = 1.95% variable. Now that quickly went back but, however variable does seem in prime position to stay low, excuse my pun. In comparison, a 5 year fixed rates from most central banks are hovering between 2.5 and 2.99. Its a fun time being a variable consumer, even if not much else is!
If you want to know more about the current mortgage situations, contact us and we will have our team give you some updates or professional guidance.
