So much has changed since COVID-19 took the world by storm. Shutdowns, bans, closed businesses, all of this has changed the landscape of our lives. It is an understatement to say that it has had a huge impact on our economic landscape. So how has it impacted the Canadian economy? Or, more specifically, how has the coronavirus impacted mortgages?
How Is Coronavirus Affecting The Canadian Economy?
Not only is coronavirus affecting public health as a whole, but it also continues to ravage society financially and significantly impacted our economy. No one knows what the future brings or when the pandemic will end. It has already caused stock markets to crash, businesses to lose profits and close, and interrupted supply chains.
There are real concerns about the coronavirus causing a huge recession in Canada and around the world. As a response to this, the Bank of Canada cut its key interest rate to 0.75%. Things seem to be changing by the hour, so it’s hard to get a clear picture or come to a conclusion about the state of the economy in Canada.
How Has The Canadian Housing Market Been Affected?
While things seem to be coming to a close or being stalled, the housing market is a much different situation. The housing market is set to become a hot market in spring, more so now that mortgage rates are at an all-time low. And because of the central bank’s rate cuts, more mortgage applications may be filled out in the future.
People are scared about coronavirus, but are also scared that they may be missing a good deal when it comes to home buying and locking in a low-interest rate. Other financial markets may be taking a hit, but the opposite is true for the housing market. Sales have been up by 47% during the first week of March compared to last year, and average housing prices have increased by 18%!
Variable Or Fixed Rates?
The pandemic has made it a bit easier to choose between a fixed or variable rate when it comes to your mortgage. Because of falling interest rates, fixed-rate mortgage rates are more attractive despite variable-rate mortgages having lower rates in the beginning. It’s likely you can lock in a fixed-rate mortgage at a lower rate than a variable-rate mortgage.
Choose a fixed-rate mortgage if you have good qualifications and a high credit score with a low debt-to-income ratio. If you are planning to stay in your home for a while and want your mortgage rate to remain unchanged throughout the terms of your loan, then this is another reason to choose a fixed-rate mortgage.
The coronavirus pandemic really affected the world in more ways than one. Global health as a whole has changed and will never be the same. Other than that, our economy has taken a huge hit. Despite this, it has had a positive effect on mortgages and real estate, thanks to the result of low-interest rates.