Mortgage brokers and industry watchers are predicting an even lower lending rate as Canada’s economic uncertainty and plunging oil prices continue to emerge.
Vancouver broker Peter Kinch believes the Bank of Canada’s (BoC) surprising January cut in the overnight lending rate to 0.75% from 1% could be the beginning of unprecedented lows.
“I think we will see another Bank of Canada rate cut in March,” he said.
The mortgage consultant with Dominion Lending Centres foresees BoC will drop its overnight lending rate to 0.5% on 4 March, the date of the next BoC rate announcement. Kinch thinks this could result in variable lending rates for residential mortgages of 1.9% – “the lowest any of us have ever seen.”
Kinch’s predictions come after hints from BoC governor Stephen Poloz of further rate reductions.
He said low oil prices were “unambiguously negative” for the Canadian economy and that the central bank can “take out extra insurance.” Analysts viewed this comment as a potential sign of a rate cut.
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