Bank of Canada Mortgage Rate Announcement - September 2021
September 9, 2021 | Posted by:
In our most recent Winnipeg real estate news update we let you know that a Bank of Canada announcement would be arriving early in September. As scheduled, they issued a press release yesterday (September 8). Do new buyers and investors have anything to be concerned about? Or does the announcement instead incite cause for celebration? The answer is rooted in the current state of the Canadian economy. In Statistics Canada’s own recent report, the country learned that GPD declined in the second quarter. Seeing as we’re in a “forth wave” the third quarter will be equally lagging. So no - the Canadian economy isn’t great at the moment. But for households that plan on getting a mortgage this autumn, this is actually very good news. Why? Let’s review the Bank of Canada’s announcement for some insight.
What Home Buyers Need to Know About the September 2021 Bank of Canada Announcement Regarding Lending Rates
Prime Rate Won’t Budge
On Wednesday, the Bank of Canada announced that the overnight rate will hold steady at .25%. It hasn’t budged since March 2020. This is great news for buyers who are considering a variable rate mortgage. The Bank’s overnight/prime rate has a direct impact on variable mortgage rates. If it goes up, so does the variable cost of buying a home. If it holds steady, variable rates hold steady. All else equal. Given that variable rates are at or near historic lows, the economic design is exactly what you want to see. To clarify, if you want to take advantage of a variable rate today, your introductory rate will be in the 1.25% to 1.35% range (at press). That said, you have to qualify based on the current stress-test rate of 5.25%. Learn more about the new stress test here or simply call 204.290.9950 and we’ll be happy to clarify it for you. Either way, the Bank of Canada’s move to make no moves in the borrowing rate presents buyers with the opportunity of a lifetime!
Bank Commits to Buying $2 Billion in Bonds Each Week
Why should you care what the Bank of Canada is doing on the bond market? Because their activity in the market impacts fixed mortgage rates, including that historically low 5-year fixed mortgage rate that you’ve had your eye on all summer. Through 2021, the Bank has been supporting the bond market by pouring billions of dollars into bonds, and have been pledged to keep doing so in order to keep fixed interest rates low. In their Wednesday announcement they stated that they will continue buying bonds at a pace of $2 billion per week. This means fixed mortgage rates will stay at a level that makes entering the Winnipeg real estate market as financially viable as it’s ever been.
To reiterate, this month’s Bank of Canada announcement is music to the ears of first time buyers. That said, Winnipeg real estate inventory will continue to tighten. 2021 has been and continues to be a record breaker for home sales. If you wait too long to pluck your dream property from the existing inventory, there may not be anything left by the time 2022 rolls around. Get pre-approved today and feel free to call mortgage broker Ron Chan at 204.290.9950 to discuss your options and goals.