The Bank of Canada lowered its key interest rate by 0.25 percentage points to 4.75 per cent on Wednesday, the central bank’s first rate cut since March 2022. The rate impacts loan and mortgage rates in Canada, and homeowners with variable-rate mortgages will see their interest rates drop by 25 basis points immediately.
Related: A Complete Guide to Navigating Interest Rates in Canada for 2024
Bank of Canada governor Tiff Macklem said the bank’s “monetary policy no longer needs to be as restrictive,” adding that we’ve come a long way in the fight against inflation.
Economists anticipated the move as the inflation rate has eased over the last few months.
Speaking to Global News, James Laird, co-CEO of Ratehub.ca, says this is good news for homeowners who kept their variable rate mortgages, despite facing rising monthly payments due to the previous rate hikes.
“For those who stuck with it, they were waiting for this day,” he said.
Related: When Will Mortgage Rates Drop in Canada? An Expert Weighs In
According to Ratehub, homeowners with a 5.95 per cent mortgage on a $700,000 home with $650,000 outstanding could see their mortgage payments drop by almost $100 monthly.
Most of Canada’s major banks have already cut their prime lending rates to reflect the change.
Looking for more on Canada’s real estate market? Check out HGTV Canada’s Real Estate section for the latest housing news and trends.
