Interest rates will stay at record lows until 2023, Bank of Canada predicts

“It’s going to be a long climb out, and we recognize that households and businesses are facing an unusual amount of uncertainty,” Governor Tiff Macklem told the press.

“Against that background, we are being unusually clear that interest rates are going to be low for a long time.”

The decision to maintain the record-low rate, which plunged from 1.75% to its current level in March, follows a “historic drop” in economic activity in the first half of the year.

What low rates mean for you

Lower interest rates make borrowing more affordable and encourage Canadians to put more of their money back into the economy.

Macklem has publicly stated the overnight rate — the interest banks charge each other for short-term loans — is already at its “effective lower bound” of 0.25%. It’s as low as the bank is willing to go, as the governor has no intention of sending rates into negative territory.

Although the overnight lending rate doesn’t directly affect how much interest you’ll pay on a loan, it influences the prime rate, which does.

The prime is the amount of interest commercial banks like RBC and BMO charge their best customers. It’s used to set the rates on all sorts of loans, including mortgages and credit cards.

So long as your credit score is in good shape, this is a golden age for borrowing.

Thinking about upgrading your kitchen or buying a new car? You can get a tremendous rate on a personal loan. Or if you’re in the market for a home, mortgage rates have never been lower.

Even if you’ve already got a mortgage, refinancing now could slash your monthly payments and save you thousands in interest over the next few years. Experts say anyone paying more than 3% on a fixed-rate mortgage — or 0.75% more than current rates — should come out ahead by renegotiating.

Use the tool below to compare mortgage rates from more than 30 federally insured lenders and see what’s available: