It was an unusually rough Monday for countless investors as the TSX plunged more than 280 points on fresh coronavirus fears, which in turn is pushing fixed mortgage rates down further.

With new outbreaks of the virus reported in Italy, South Korea and Iran, the World Health Organization appears ever closer to declaring the outbreak officially a pandemic.

That had investors fleeing stocks and heading towards the safety of bonds, which drove bond yields down to near six-month lows. Bond yields lead fixed mortgage rates, and numerous lenders already began dropping rates offered to brokers on Monday.

As a result, the lowest nationally available 5-year fixed rate for insured mortgages fell to 2.33%, according to rate comparison site RateSpy.com. Comparatively, exactly one year ago the lowest insured 5-year fixed rate available was 3.19%.

On a $300,000 mortgage, that works out to a monthly mortgage payment savings of $130, or $12,144 over a 5-year term.

Observers say bond yields could breach 2019 lows within weeks, which would continue to push fixed mortgage rates even lower.

Bank of Canada Rate Cut More Likely

Odds are rising that the Bank of Canada will deliver two quarter-point rate cuts in 2020 as fears of coronavirus—and its economic impacts—grow with each passing day.

Overnight Index Swap markets as tracked by Westpac are now pricing in a nearly one-in-four chance of a rate cut at the Bank’s next policy meeting on March 4, though markets are nearly fully priced in for two quarter-point rate cuts before the end of the year.

“Government bond yields are well below where they started the year, though we don’t see the temporary economic disruption from coronavirus exerting lasting influence on G10 monetary policy (in the BoC’s case, though, it could provide an additional push for a central bank already contemplating a rate cut),” wrote economists at RBC Economics, which expects the BoC to deliver a rate cut in April. “As the impact of the outbreak fades, we expect yields will move higher.”

Economists at CIBC are in agreement that the Bank is most likely to deliver its first rate cut announcement in April, writing: “Softness in GDP growth continues and strength in the labour market wanes accordingly. Moreover, that will likely be compounded by the repercussions of the coronavirus on global supply chains and production, and potentially current rail disruptions. That could be enough reason to see the Bank of Canada cut interest rates by 25 bps in April.”