The Bank of Canada holds at 0.25% on October 28, 2020. Bond purchases change shape as the recovery slows.
The decision at a glance
| Policy measure | Announcement |
|---|---|
| Overnight target | 0.25% |
| Change | No change |
| Bank Rate | 0.50% |
| Deposit rate | 0.25% |
Bond purchases change shape as the recovery slows
The Bank reduces weekly government bond purchases to at least $4 billion while shifting toward longer-term bonds. It judges that the combined adjustment provides at least as much monetary support as before, because longer maturities more directly influence borrowing costs important to households and businesses. The smaller weekly total should therefore not be read on its own as a move toward higher rates.
Canada’s summer rebound is stronger than expected, but rising infections are likely to slow fourth-quarter growth. The effects are particularly hard on lower-income workers and sectors requiring close contact. The Bank forecasts a GDP decline of about 5.5% in 2020, followed by growth averaging almost 4% in 2021 and 2022. It also lowers its estimate of the economy’s future productive capacity.
September inflation is 0.5%, and core measures remain below 2%. The Bank expects the conditions for a policy-rate increase to arrive only in 2023 under its current projection. That timing is conditional, not a fixed expiry date for low rates. A household can consider the guidance when comparing mortgage options, while still checking renewal risk, penalties and the cost of changing plans.
What this means for a mortgage
The overnight target influences short-term borrowing costs, including lender prime rates. Variable mortgages and home-equity lines of credit are more directly exposed to prime-rate changes. Fixed mortgage offers also depend on bond yields, funding costs, the term and lender competition; they can move even when the Bank holds.
Put the announcement into a Greater Sudbury plan
Buying or renewing
Ask for written figures using your balance, down payment and amortization. Compare payment mechanics, prepayment options, penalties and the cash left after closing. A variable mortgage with fixed payments may change how much principal you repay instead of changing the payment immediately; the contract determines the result.
Preparing to sell
Financing affects what buyers can carry, but it does not set one price for every home. Compare recent sales and active alternatives in the same neighbourhood and price range. Condition, carrying costs, presentation and offer terms remain central to the decision.
Official announcement: Bank of Canada, October 28, 2020. The national policy decision does not, by itself, establish a change in Greater Sudbury property values.
For context, compare the September 9 hold at 0.25% with today’s decision.
For a local plan, explore the Buyer Experience or Seller Experience.
Expect Moore for Your Real Estate.
— Chad Moore, REALTOR®
— Lake City Realty Ltd., Brokerage