The Bank of Canada recently announced a 7th straight rate cut - this one by 0.25%.
Some key points here for you:
- This change will directly impact those with variable rate mortgage and lines of credit – the rate will go down by 0.25%.
- Given that the mortgage payment is set with your current lender, it will not auto-change with this announcement. However, more of your payment will go towards the principal of your mortgage, thus less towards interest.
- Roughly speaking, the decrease will see principal/interest shift by about $15/mo for every $100,000 owing. Example: if a mortgage balance is $650,000, the distribution will change by about $15 x 6.5 = $97.50/mo or $48.75, if paying bi-weekly.
- In their words, "While economic growth has come in stronger than expected, the pervasive uncertainty created by continuously changing US tariff threats is restraining consumers’ spending intentions and businesses’ plans to hire and invest. Against this background, and with inflation close to the 2% target, Governing Council decided to reduce the policy rate by a further 25 basis points. Monetary policy cannot offset the impacts of a trade war. What it can and must do is ensure that higher prices do not lead to ongoing inflation. Governing Council will be carefully assessing the timing and strength of both the downward pressures on inflation from a weaker economy and the upward pressures on inflation from higher costs. The Council will also be closely monitoring inflation expectations. The Bank is committed to maintaining price stability for Canadians."
- The next rate announcement will be on April 16th, followed by another five announcements thru the end of 2025.
- Many economists feel that if tariffs to stick, it will lead to further rate reductions.
The full Bank of Canada release can be found and read here.
Post a comment