At their rate announcement on June 3, 2020, the Bank of Canada (BoC) opted to leave the overnight lending rate unchanged at 0.25%, pointing to improving economic and market indicators. This announcement is in line with expectations that the BoC set at the last rate announcement in April 2020 – where it noted that the current lending rate could be considered its “effective lower bound” or that no further rate cuts were being planned.
At the June announcement, the BoC highlighted that although uncertainty about how economic recovery will unfold remains, it anticipates the economic impact from the pandemic has reached a peak.
Mortgage Borrowers Face No Immediate Impact
With no change to the overnight lending rate, variable mortgage borrows can expect their mortgage payments to remain unchanged for now. This is directly due to the fact that the rate set by the BoC is used by banks in Canada to determine their own variable mortgage rates and credit lending rates.
Fixed-rate borrowers coming up on a mortgage renewal or refinancing will be able to take advantage of the current low rate environment. Those who are not coming up on a renewal or do not require refinancing will see no changes to their ongoing payments.
Read the full announcement from the BoC here.
