From Brendon Ogmundson, BCREA Chief Economist:Highlights:
- 5-year fixed mortgage rate falls under 2 per cent
- Canadian economic recovery entering recuperation phase
- Bank of Canada on hold until 2023?
The average Canadian 5-year fixed rate has fallen to under 2 per cent, the result of a rapid and overwhelming policy response from the Bank of Canada to the COVID-19 pandemic.
The Bank swiftly brought its overnight rate to its effective lower bound of 25 basis points and used the impressive scope of its balance sheet to counteract a nascent rise in credit spreads. Those measures, and those of its global counterparts, helped to forestall a potential repeat of the credit crisis that shocked the global economy over a decade ago.
The qualifying rate is still high at 4.79 per cent.
A mild rise in rates is expected as the Bank slows and eventually ends its QE, perhaps by end of 2021.
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