The Bank of Canada delivered its fourth consecutive rate cut.
On October 23, the Bank of Canada lowered its policy rate a half percentage point, bringing it down to 3.75%, a reduction of 1.25% from its peak. This is the fourth consecutive rate cut this year, and it could bring a bit of relief if you have a variable-rate mortgage or other loans tied to a bank’s prime rate.
If you’d like to dive into the details, you can read the Bank of Canada’s full statement here.
What’s next?
Lenders usually take a few days to adjust their prime rates after the Bank of Canada makes a move. We’re expecting the prime rate to drop to around 5.95% at most lenders, while TD Bank’s prime rate should land around 6.10%.
What does this mean for you?
- If you have a variable-rate mortgage: Good news! You’ll likely see lower interest costs of approximately $29.96 per $100,000, based on a 25 year amortization, soon. If your payments are fixed, more of your payment will go toward the principal. If your payments adjust with the prime rate, your monthly payment should decrease a little.
- If you have a fixed-rate mortgage: Nothing changes for now — your payments will stay the same.
- Other loans tied to the prime rate: Things like personal loans or lines of credit will also see a drop in interest charges.
Looking ahead
The Bank of Canada’s next rate decision is scheduled for December 11, 2024, and markets are already expecting another rate cut. While nothing is guaranteed, this could mean even more relief for borrowers in the coming months.
If you have any questions or want to chat about how this might impact your mortgage, feel free to reach out. I’m always happy to help!
