Financial turmoil pushes mortgage rates lower
It’s hard to escape the headline news of the corona virus, pipeline protestors, road and rail blockades and of course the turmoil in Global financial markets. This meltdown is a correction that we have not seen since the financial crisis back in 2008. On Tuesday the Federal Reserve in the US took action and dropped rates by half of one percent. The 10 year US treasury hit a record low of just under one percent. On Wednesday the Bank of Canada matched the Feds and dropped the overnight rate by a half of one percent and noted that they are prepared to take further action as required. The economic impact of the corona virus is being felt across the Globe and although it’s still early; major economies should experience a significant contraction. This is obviously terrible news for many but on the positive side it should reduce borrowing costs and help with affordability of local real estate. Mortgage rates were expected to decline this year but are now at the lowest they have been in many months. Canada was already facing headwinds and this latest crisis will continue to challenge our economic growth and keep the downward pressure on rates. Another rate decline by the Bank of Canada is expected at the next Bank of Canada meeting in April. Check out the latest mortgage rate specials at the end of this report.
The trend of our local real estate market continues on the path of recovery. Residential home sales across Greater Vancouver increased 45% from last February. The total number of homes listed for sale is 21% lower than same period last year. Steady home buyer demand with reduced supply has been the story lately. Benchmark prices are once again starting to rise for all property types. Lower Mainland continues to be a sought out place to live. Low mortgage rates, a fair climate, strong employment growth and diverse demographic are some of the things that makes it a desirable place to live. One thing that cannot be overlooked is our population growth. In 2019 BC’s population grew by 70,000 or by almost 2%. Surrey has seen the most growth than any other city in the province with 16,382 new residents. This number may seem modest, but the number of new homes becoming available is currently not keeping pace with this growth. We have seen a sharp decline of newly constructed homes from 2018 to 2019. In some property types the drop is as much as 76%. Our Government policies that have been introduced over the past few years to help improve affordability may have an impact in the short term, but will likely only worsen the issue over the long term, especially for BC residents.
Mortgage rates:
5 year fixed, conventional uninsured: 2.64%
5 year fixed, high ratio insured: 2.54%
5 year variable, conventional uninsured: Prime -.80%
5 year variable, high ratio insured: Prime – 1.0%