The World Health Organization's decision to declare the novel Coronavirus an international public health emergency on Thursday could have serious economic consequences.

As the public's fears of the deadly virus worsen, James Laird, co-founder of Ratehub Inc. and president of CanWise Financial mortgage brokerage, says consumer confidence is going to decline, the trade will slow, and economic growth will diminish.

These trends are all key factors that the Bank of Canada considers when it sets rates, and yet, before considering the effects of the virus, Laird says the Bank was already signalling concern about what it was seeing in Canada, including slowing job growth and business investment.

And with the global spread of the Coronavirus, Laird says it has increased the likelihood of a rate cut sooner in the year.

"Canadians simply want to know what the outlook is for mortgage rates based on all market conditions. One of those conditions, unusually, is a virus," Laird told Toronto Storeys.

READ: Toronto Apartments and Condos Taking Measures During Coronavirus Alarm

As for how mortgage rates in Canada will be affected, Laird says the severity and length of the health crisis will be the determining factors.

"The only recent comparable event was the SARs outbreak of 2003, during which time global economic growth slowed and mortgage rates in Canada dropped by 1%," said Laird, who predicted that if the coronavirus does become a long and severe pandemic, the Bank of Canada would likely cut its key overnight rate.

However, Canadians who have a variable rate mortgage would benefit in this scenario.

"Consumers who are optimistic that the coronavirus will not be too severe, and that the Canadian economy as a whole will do ok in 2020, should lock into a fixed rate."

Current fixed rates are already low, and might drop in the near future, said Laird.

The novel coronavirus has already spread throughout China, and a handful of cases have been confirmed in 22 other countries. As of Friday, 9,776 cases of coronavirus had been identified and 213 people had died.

Personal Finance