Bank of Canada Mortgage Rate Announcement - March 2022
March 3, 2022 | Posted by: Ron Chan
We concluded the month of February with a notice to all prospective home buyers and investors. The notice was simple - get a mortgage fast. Why? Because we saw it coming. We predicted that the Bank of Canada was going to raise the prime rate after over two years without a budge, and we were on the money. They did. With the suspense out of the way, we're going to take a look at what this means for new buyers in the Greater Winnipeg area. Let's review.
What Home Buyers Need to Know About the March 2022 Bank of Canada Announcement Regarding Lending Rates
Put the Prime Rate Increase in Perspective
In their March 2 announcement, the Bank committed to raising the policy rate from .25% to .5%. They have done so to control inflation. After hitting the highest inflation rate (5.1%) the country has seen in over 30 years at the onset of the new year, a raise in the prime rate was due.
On the surface we know that it sounds like the cost of buying a home in Winnipeg is about to get higher. When the cost of borrowing increases that is a logical conclusion. However, we encourage you to put this increase in perspective. Remember, there hasn't been an increase in the prime rate in about 800 days. The media is over-playing the news because it sells newspapers, or more aptly for this century, gets more clicks. So what's the perspective? It's still one of the best times in history to buy a home as far as the borrowing rate is concerned. But don't take our word for it. Instead, have a look at the following chart of the Prime Rate and Bank of Canada Overnight Rate from the last 87 years:
See that? Don't let the media scare you from buying a home in the best market in Canada. This rise in the borrowing rate is negligible at its most dramatic. For instance, TD's variable rate is listed at 1.8% today, while BMO has a 5-year fixed listed at 3.24%. And these are just the marketed rates. When you work with a reputable mortgage broker with longstanding relationships with both banks and alternative lenders, you can get access to lower unadvertised rates.
That Said, Act Now
While the Bank of Canada rate increase is indeed negligible at best, we do encourage you to get pre-approved on a Winnipeg mortgage soon. The Bank's increase of the prime rate is likely to be followed by more as the months progress. Plus, the inventory of desirable Winnipeg properties is getting leaner by the week. New construction is coming, but it's not here yet.
If buying a home in Winnipeg, contact Ron Chan today at 204.290.9950 to get access to lower mortgage rates and to learn more about first-time buyer incentive programs.