Bank of Canada Cuts Interest Rate: What It Means for Your Mortgage

Understanding the Interest Rate Cut

Today, the Bank of Canada announced a 25-basis point reduction in its policy rate, bringing it down to 3.00%. This marks the sixth consecutive rate cut, and it will lead to a decrease in the prime rate, which directly impacts variable-rate mortgages and other loans.

Most lenders are expected to adjust their prime rates to 5.20%, with TD Bank’s mortgage prime likely dropping to 5.35%.

How This Affects You

• Variable-Rate Mortgage Holders: If your payments are fixed, a larger portion will go towards paying off your principal balance. If your payments adjust with the prime rate, you could see your monthly payment drop by about $14 per $100,000 of mortgage debt (on a 25-year amortization).

• Fixed-Rate Mortgage Holders: Your payments remain unchanged, so you won’t see any immediate impact.

• Other Loans Tied to the Prime Rate: If you have a personal loan or line of credit, you can expect a decrease in interest charges.

Looking Ahead

The Bank of Canada’s next rate decision is set for March 12, and we’ll see plenty of economic data between now and then that could impact their decision.

As always, if you have questions about how this change could affect your mortgage or want to explore your options, I’m here to help!

Apply Today

If you’re considering refinancing or want to explore your mortgage options, now could be a great time to act. Click here to apply or get in touch, and I’d be happy to help you navigate this rate change and find the best solution for your financial goals.