Today, the Bank of Canada cut its policy rate by 50 basis points (0.50 percentage points), bringing it down to 3.25%. This is the fifth reduction this year and will result in a lower prime rate -- which affects variable-rate mortgages and other loans.
We anticipate most lenders will lower their prime rates to 5.45% in the coming days, with TD Bank’s mortgage prime, which is priced slightly higher, likely dropping to 5.60%.
If you’d like to read more details, you can find the full statement from the Bank of Canada here.
How does this impact you?
- If you have a variable-rate mortgage: This could mean lower interest costs soon! If your payments are fixed, more of your payment will go toward reducing the principal. If your payments adjust with the prime rate, your monthly payment should reduce by roughly $28 per $100,000 of mortgage loan, based on a 25-year amortization.
- If you have a fixed-rate mortgage: Your payments won’t change for now, so you can expect no immediate impact.
- Other loans tied to the prime rate: 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 January 29, 2025. We’ll need to wait for incoming data to see if a rate cut is likely for January.
If you have questions or want to discuss how this rate cut impacts your mortgage, I’m here to help! Feel free to reach out.
