Home mortgages to remain cheap as Bank of Canada keeps interest rate at 0.25 percent

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      The cost of borrowing money for things like buying a home will stay low.

      The Bank of Canada announced that it is holding steady its interest-setting rate at 0.25 percent.

      “Monetary policy is working to support household spending and business investment by making borrowing more affordable,” the central bank said Wednesday (September 9).

      The bank noted that household spending “rebounded sharply over the summer, with stronger-than-expected goods consumption and housing activity largely reflecting pent-up demand”.

      The Bank of Canada’s key rate influences interest rates for home mortgages.

      The bank slashed its trend-setting key rate three times in March 2020 to keep the economy afloat amid the COVID-19 pandemic.

      From a rate of 1.75 percent at the start of that month, the central bank brought it down to 0.25 percent, the lowest level that can be set.

      Based on rates available at the ratehub.ca site as of September 9, lenders such as CanWise Financial and MortagagePal.ca were offering five-year mortgages at 1.74 percent.

      TD Bank had 1.99 percent, and Scotiabank, 2.09 percent.

      “As the economy moves from reopening to recuperation, it will continue to require extraordinary monetary policy support,” the Bank of Canada said in its September 9 announcement.

      The bank will “hold the policy interest rate at the effective lower bound until economic slack is absorbed”.