As was widely anticipated, the Bank of Canada for the third consecutive time has reduced the current policy rate by 0.25%. As such, Prime Rate will now be 6.45%.

This is welcome news to those who currently hold variable or adjustable rate mortgages and to those who have secured or unsecured lines of credit. While interest rates remain higher than in past years, this is a step in the right direction to improve the cost of living for Canadians across the country. For folks who are coming up for renewal or looking to enter the housing market for the first time, this announcement marks a commitment to ensuring housing costs move back to a place of relative affordability. 

This rate cut does not have a direct correlation to fixed mortgage rates as fixed rates are priced against the bond market. If you are unsure if you are impacted by this announcement, please book a time to chat HERE!

In the press release, the Bank of Canada noted many positive economic trends including the slow of inflation in July at 2.5%. They also noted while shelter price inflation (driven in part by high mortgage borrowing rates) is still high(er), it is also starting to show signs of slowing. This is partially due to the continued Bank of Canada rate decreases over the past few months. 

As has been continually indicated by the Bank of Canada, "monetary policy decisions will be guided by incoming information and [their] assessment of their implications for the inflation outlook". Currently, economist are pricing in further decreases for the year, though the amount of those decreases are still up for deliberation and can change quickly and dramatically. 

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 and Monetary Policy Report is scheduled to take place on October 23rd, 2024.

OAC, E&O