A perfect storm of factors – led by Coronavirus – is contributing to lower borrowing costs for Canadians

While the global health crisis stemming from the Coronavirus outbreak has created immense volatility in financial markets, consumers looking to purchase a home this spring may be in for a much more positive experience.

With global trade and consumer confidence declining as a result of the “material negative shock” connected to the Coronavirus outbreak, the Bank of Canada has announced it is cutting its overnight rate by 50 basis points to 1 ¼ per cent. While lower yields in the bond market are impacting fixed rate products, the new BOC rate cut announced on March 4 will drop variable mortgages rates as well. The result? A spring of advantageous borrowing costs.

In fact, the BOC stated it is prepared to reduce rates again in the coming months should the action be necessary to protect the economy.

A similar trend occurred during the SARS outbreak in 2002-2003, when borrowing rates dropped by one per cent and stayed that way for nearly a year.

That said, the Coronavirus situation isn’t the only factor impacting current rates. In fact, slowing business investment and waning consumer confidence in Canada has been brewing for some time.

For buyers, this means anyone shopping the housing market in the months ahead will likely have advantageous mortgage options for both fixed and variable rates come spring.

Of course other factors will still come into play for buyers, such as the fact that much of Montreal is currently experiencing sellers’ market conditions due in large part to a lack of supply. Moreover, despite advantageous mortgage rates, buyers will still have to pass the Government of Canada’s stress test. This stress test was introduced in 2018 and uses either the 5-year benchmark rate set by the Bank of Canada or the buyer’s mortgage interest rate plus 2 per cent – whichever is higher. These stress test rules only apply to new mortgage loan agreements, which means they would be relevant to first time homebuyers.

How we can help

The experts at Orbis Mortgage Group, Canada’s premiere mortgage agency, are on hand to assist buyers throughout the entire process. Our licensed team of mortgage professionals has access to hundreds of lending institutions across Canada including big banks, credit unions, trust companies and private lenders. Moreover, with decades of combined experience in the industry, our professionals are ready to assist with all of your financing needs, from choosing a mortgage that suits your personal situation and lifestyle, budget, and risk tolerance, to demystifying the mortgage process, all the while saving clients stress, time, and money.

If you’re considering buying a home in the coming months there are many advantages to getting started with the process ahead of time. A discussion with a licensed mortgage professional can help you understand not just borrowing costs, but also what type of budget you should be sticking to given your current financial situation. Moreover, obtaining a mortgage preapproval can help ensure a quick and hassle-free buying process, and shows sellers’ that you’re serious about a purchase.