Good news this morning! Tiff Macklem, the Governor of the Bank of Canada, announced a quarter point percentage rate cut to the benchmark rate from 4.75% down to 4.5%. This is the second consecutive meeting resulting in a rate cut announcement this year.
Lenders typically follow suit, dropping their own Prime rates within a day or two which should translate into a quarter point rate drop to lenders prime shortly. Most lenders currently have their Prime rate set at 6.95%, so we should see this come down to 6.70% by the end of the week.
This drop will see a quarter point decrease to the effective interest rates with most major lenders, providing immediate interest cost relief to borrowers currently holding Variable Rate mortgages and Secured Lines of Credit.
According to Governor Macklem, the decision was made in light of an easing inflation rate, along with an overall weakening of the Canadian economy, coupled with a weakening job market.
Although inflation numbers have been improving, elevated home prices and rent costs continue to put pressure on inflation numbers, which adds some uncertainty to the continuing downward trend of inflation which is necessary for further rate cuts. Despite this uncertainty, there seems to be optimism that there will most likely be further cuts before the end of the year and continuing into 2025.
This recent announcement along with all signs pointing towards further rate cuts continues to make the option of Variable Rate mortgage for new purchases or refinances an attractive option to consider, however, they are not for the faint of heart!
Click here to see the full official announcement from the Bank of Canada.
For additional information and to discuss how this affects your current situation or whether a Variable Rate mortgage is right for you, reach out to your Grimsby Mortgage Broker.