The mortgage and interest rates are the most talked about or discussed topics in the current financial situation. In the last year, due to the pandemic, almost all the countries have suffered huge economic loss, several companies shut their doors, and millions of people lost their jobs. In such situations, the interest rates also increased that made people face lots of issues regarding purchasing new properties, availing mortgages etc.

Here is a recap of the previous year, 2020, just before the pandemic surfaced in Canada; the 5-year mortgage rate was trending between 2.90%- 3.09%. The Vancouver Mortgage rates are loosely depending upon the bond yields, which were trending to about 1.5%.

The Bank of Canada or BoC overnight rate or the lending rate was 1.75%, and the prime lending rate was about 3.98%. A lot of mortgage rates and lines of credit depends upon the prime rate. At this time, the mortgage lenders offered discounted prime rate for new deals, which were high as 1%.

But as COVID 19 started to spread by March 2020, the 5-year bond yields fall low as 35 basis points, and the fixed mortgage rates also fell low to 2.40%, but the rate went high from 2.84 to 3%. But they are going down now. In March, the Bank of Canada gets reduced to 3 times the normal rate, and now it is 0.25%. Even most of the loan lenders also lower down the prime lending rate to about 2.50%. However, these deep discounts have also vanished. The variable rates have lower than 2.25%.

It is said that the 5-years mortgage rates are linked with the 5-years bond yield, which reduces the BoC’s rate overnight rate that will soon become the fixed rates. But, in reality, these two rates are not connected. In the same manner, the variable-rate mortgages were thought to be linked with the BoC overnight rate but truly are not.

Though the low bond yields reduced to the prime rate, the lenders who provide the Vancouver mortgage consider the other factors like the rise of unemployment for 1. One of the main factors that point to a healthy economy is jobs. Without proper jobs, household budgets get higher, and consumer purchases become lower. The manufacturers also tend to reduce the inventory that leads to lay-offs and bankruptcies increased. The job loss during the pandemic is also one of the important reasons for mortgage default cases.

The Canadian Government keeps the economy of the state afloat by inducing billions of dollars of financial support in the economy and instilling a small degree of confidence in Canadians’ minds. It is true that if this condition persists, the state will go under recession.

The housing market is one of the main components that lead to the success of the Canadian economy. In many ways, this industry can help in stabilizing the faltering economy. If the property market gets increased, the economy will soon increase, jobs will return, and low-interest rates will increase.