BoC cuts rate; when will mortgage rates follow?
Yesterday’s interest rate cut by the Bank of Canada was not widely expected and has not been universally welcomed but it’s certainly got everyone talking. As soon as the announcement was made the speculation began as to what effect the cut would have on the housing market. Low interest rates are one of the driving factors behind the high levels of sales and prices over the last year but will the cut to 0.75 per cent drive more sales or increase consumer caution? For some the BoC’s move will be taken as a sign to be prepared for leaner times ahead however for others it will tip the balance in favour of buying a home now rather than waiting for the return of higher rates. Speculation is well underway as to when lenders will begin to cut their mortgage rates, and how low they will go. The likely scenario is for variable home loans to mirror the 0.25 per cent cut and for fixed rate deals to also drop due to their link to the bond market which will also be lower. Analysts believe that the lenders will be quick to seize on the opportunity and that mortgage rate cuts will be announced within days. As for future interest rate moves; some economists are already talking about another cut in March.