For the first time since the financial crisis of 2009, the Bank of Canada has delivered an emergency inter-meeting rate cut of 50 bps.

That brings the country’s key lending rate down to 0.75%, a level last seen in August 2017.

“It is clear that the spread of the coronavirus is having serious consequences for Canadian families, and for Canada’s economy,” the BoC said in a statement. “In addition, lower prices for oil, even since our last scheduled rate decision on March 4, will weigh heavily on the economy, particularly in energy intensive regions.”

The Bank added that it is “closely monitoring economic and financial conditions, in coordination with other G7 central banks and fiscal authorities.”

“This move came slightly earlier than we expected, but is in line with our forecast for an eventual cut to 0.25% by mid-year,” wrote Josh Nye, senior economist with RBC Economics. “While monetary policy may not be the best tool for dealing with current economic challenges, there is little reason for the BoC to keep its powder dry at this point.”

All eyes are now on Canada’s Big 6 banks to see if they will pass along the full rate cut again in their prime rate reductions. If they do, the country’s prime rate will fall to 2.95% and immediately reduce interest rates for borrowers with floating rates and Home Equity Lines of Credit.

And the Bank of Canada likely isn’t done yet. Markets are still fully pricing in an additional 50 bps of easing at the Bank’s April 15 meeting, which would bring Canada’s overnight rate to 0.25%.

“As the situation continues to deteriorate, we expect the Bank to cut interest rates to 0.25%,” wrote Stephen Brown, senior economist with Capital Economics. “But even with this policy support, the disruption from the coronavirus outbreak is likely to lead to a recession in Canada this year.”

Stress Test Changes Being Suspended 

Last month’s announced change to Canada’s insured mortgage stress test—which was to take effect April 6—has now been put on hold.

The federal government had planned to change the formula for the benchmark qualifying rate, which would have reduced the stress test from today’s rate of 5.19% to 4.89%.

A similar change for the uninsured mortgage stress test being considered by the Office of the Superintendent of Financial Institutions (OSFI) pending industry consultations has also been put on hold.

“In view of the current developments, OSFI is suspending all of its consultations and policy development on new or revised guidance until conditions stabilize. This includes the new proposed B-20 benchmark rate for uninsured mortgages,” OSFI announced. “As a result, the benchmark rate as currently published by the Bank of Canada will remain in force until further notice.”

This is good to know that open houses have now been cancelled. See below

This is great information to be shared with fellow realtors as we get instructions on what to do for our clients.

As the situation around COVID-19 continues to disrupt people’s lives, we’re actively working to update our online information for professionals and consumers. We encourage you to keep checking our COVID-19 and Real Estate page for new resources and guidance, including external links to resources you may find useful. 
 

RECBC has developed checklists to help you manage challenges related to COVID-19 when working with clients. All real estate professionals should be discussing COVID-19 with their clients to work cooperatively to find solutions that minimize risk for all parties. You can find the checklists, along with advice and considerations for professionals, on our website:

• Sellers Checklist
• Buyers Checklist
• Landlord/Tenant Checklist
• Strata Checklist

If you are working with clients or members of the public who have questions about how their real estate transaction or management services will be impacted by COVID-19, RECBC’s consumer information may be a helpful resource: Information for Real Estate Consumers on COVID-19. 

Service Reminder 
BC has declared a provincial health emergency, and so we encourage you to not visit our office in person at this time. We are continuing to provide all licensing, education, audit, and compliance services. 

We are available to serve real estate professionals and members of the public by phone or email. Do not send anything to our office by mail with the exception of applications containing original Criminal Record Search documents. You can reach us at info@recbc.ca or by phone at 604-683-9664, toll-free 1-877-683-9664.  

Real estate professionals and consumers with questions about how real estate services may be affected by COVID-19, please contact our Professional Standards Advisors at advisor@recbc.ca, or by phone at 604-683-9664, toll-free 1-877-683-9664.