On Tuesday, The Bank of Canada announced a new overnight lending rate, reduced by another .5%. In the last 14 months, that’s 8 reductions. And that’s in addition to the previously announced stimulus packages and tax breaks.

Now that the overnight rate is at an all time record low of .5%, there's obviously very little room to reduce it more, yet a 0% overnight rate is not impossible (Japan did it in the 90s). So if there's no more room to cut interest rates, what's next? The crux of our economic woes is the lack of consumer confidence both here and in the U.S. so lowering interest rates further will be more of a psychological boost than a practical one. 

Cut or no cut, rates are already at historic lows, and anyone who has job security needs to buy a home now before this window of opportunity starts to close. Now is the time for many to escape the “renting trap!” Note that current mortgage rates are 3.75-4.25%, which translates into a $45 payment per month for every $10,000 borrowed, or $1,350/month for a $300,000 mortgage. Cheaper than rent in downtown Toronto!

If you are interested to find out more, please feel free to contact me.