Bank of Canada Has Cut 1.25% in 2024 and More to Come We hopeed for it and it happened! This morning, the Bank of Canada’s first ‘oversized’ interest rate cut of -0.50% occurred. This is because the Canadian economy is weaker than they predicted and this signals that they believe inflation is under control. The September 2024 headline inflation rate was down to 1.60% and now, measures must be taken to stimulate the economy. What does this mean for you? If you are a Variable Rate Mortgage holder, the interest rate savings equal approximately $65/mo for every $100K owed. For a $500K mortgage, this will translate to $325/month in savings – this is the same for Home Equity Line of Credit holders. If your mortgage is ‘adjustable’ your payment will decrease come the second payment posted after the announcement. If you pay bi-weekly, the change will occur on the third payment posted after the rate announcement. The payments occurring in between will deliver the interest savings directly to principal before the payment decrease happens. If your mortgage lender doesn’t automatically adjust your payment (ie TD Bank), the savings will be applied to principal and you’ll have to request a payment decrease if you would like one – they will assess this on a case by case basis. Contact me anytime to review your situation. The Bank of Canada is not done yet. The last rate announcement of 2024 is scheduled for December 11th and we widely expect at minimum another 0.25% cut which will bring the Prime lending rate to 5.70% (down from 7.20% in early June). In the meantime, we will be watching what the US FED does on November 7th and we will be paying close attention to how the US Presidential election affects the bond markets and hence Fixed mortgage rates. By mid 2025, it is expected that the Prime lending rate will be down to the mid 4% range and most likely down to mid 3% by 2026. Fixed rates are not directly correlated with the BoC rate announcements, and we expect that we will start to see a more steady decline in the coming months, after experiencing a slight spike in early October. Things are definitely looking positive in the interest rate world and if you or anyone you know would like to chat about options – fixed vs variable, 3 vs 5 year etc., I’m always here and happy to help without obligation. Be well and remain positive! Best wishes, Jenn P.S. THANK YOU to everyone for your votes in August! I’m thrilled to have been named Best Mortgage Broker 2024 for the second year in a row by EloraFergusToday.com‘s Reader Choice Awards. Your support and referrals mean the world to me!