COVID-19, as we all know, has had a tremendous impact on the housing market and economy this past year. The Bank of Canada announcement has provided an ultra-low-cost of borrowing that has made it easier to qualify for mortgages and other forms of credit. As thousands of people across the country have lost their jobs due to lockdowns and stay-at-home orders, it has been difficult for many to keep up with bills and mortgage payments.

In response to COVID-19 and the impact it has had on the economy, The Bank of Canada announcement stated they will decrease its rate to 0.25% on March 25, 2020, in an unscheduled emergency announcement, shaving 0.5% from the 0.75% rate it had set just a week prior on March 16, 2020. This rate has stayed consistent through the pandemic.

As thousands of people across Ontario are struggling with employment and being let go due to COVID-19, The Bank of Canada announcement means low rates to stay as the economy stabilizes. If inflation is below target, the bank may lower the policy rate to encourage financial institutions to lower interest rates on their loans and mortgages and stimulate economic activity.

The Bank of Canada is providing several ways to support the economy and financial system and is supporting the well-being of Canadians during this difficult and unprecedented time.

First time home buyers

Interest rates have seen an all-time low for the first time ever due to the COVID-19 pandemic. This is a perfect opportunity for first-time buyers to capitalize on low-interest mortgage rates. There is now a five-year fixed rate at 1.99 percent, which is the lowest it’s ever been in Canadian history.

These low rates could mean huge savings, and really help out first-time home buyers. In response to the economic impacts from COVID-19,  interest rates were lowered to ¼ percent to support economic activity. This is to support homeowners and businesses by lowering payments on existing and new loans to help stabilize the economy and support Canadians as they deal with unemployment. As Ontario is currently in its third stay-at-home order people continue to deal with instability and need to continue to make their mortgage payments.

Real Estate Investors

This is a perfect opportunity for investors to capitalize on. With low interest rates and lower condo prices, this isn’t something that happens often. Investing in a rapidly growing city like Toronto is a great chance to build assets that will increase in value. Investors should use this time to capitalize on the current Real Estate market, as condominium sales in downtown Toronto have been slowing down as a result of the COVID-19 pandemic. The sooner you can buy, the further your money will go. Since Toronto’s Real Estate market has been experiencing incredible price growth, the money you have today is worth more than tomorrow.

COVID-19 Recovery 

As we are well into the third wave of COVID-19, our economic recovery will take much longer than expected. These low-interest rates are projected to stay well into 2022. There is looking like there is a light at the end of the tunnel as vaccination rates have surged in the past couple of months. Vaccination efforts will be essential to helping Ontario recover from this past year. The Bank of Canada has said in its updated economic outlook, a full recovery from COVID-19 will take some time. The Bank of Canada doesn’t see inflation returning to its two percent target until 2023, one year longer than previously projected, but the bank’s key rate is likely to stay low until then. If you are interested in taking advantage of the historically low-interest rates, book a call with us today to learn more about your options.