We hope your first month of 2025 has been off to a fantastic start and this news of yet another Bank of Canada rate decrease finds you well! This morning, the Bank of Canada made their first announcement of 2025. For the sixth consecutive time since June 2024, the Bank of Canada decided to reduce their policy rate; this time, by 0.25%. This 0.25% reduction will result in Prime Rate now being 5.20%.

The Bank of Canada also released their first of four Monetary Policy Reports (MPR). Within this report, there are details surrounding the Bank's decision to finish its quantitative tightening cycle and restart the process of normalizing their balance sheet with asset purchasing. 

As indicated in our previous announcements, this reduction is welcome news to those who hold variable or adjustable rate mortgages and those who have secured or unsecured lines of credit. This rate cut does not have a direct correlation to fixed rate mortgages as fixed rates are priced against the bond market. If you are unsure if you are impacted by this announcement, please reach out or book a time to chat HERE!

While the last handful of weeks have been tumultuous at best, economists are encouraged by this decision. As has been discussed frequently in the media, there is a lot of economic uncertainty on the horizon. The impending decision on tariffs imposed on Canadian goods being imported to the United States is one of the many factors currently driving interest rate decisions and the fluctuation in forecasting models.

The United States Federal Reserve also made their interest rate decision today and have held for the second consecutive time. While this doesn't have direct impact on Canadian mortgage holders; it is valuable information as we continue to have close economic ties to the United States which in turn has an impact on our dollar and bond yields.

We understand there may still be many questions and concerns amongst our clients and partners. As part of our commitment to providing the most up to date information and comprehensive support, we have recently launched our very own Canadian Mortgage App. Interested in potentially refinancing to make your monthly payments more comfortable? Click HERE to download the app and run various scenarios to see what the best fit may be. 

Information note

As always, we are here to help. If you'd like to chat about your scenario and see what options may be available for you, let us know! We will keep you updated as we received more information about today's announcement. The next announcement is scheduled to take place on March 12th, 2025.

OAC, E&O