Experts say homeowners with variable mortgage rates will benefit from lower monthly payments after the Bank of Canada’s latest cut to its key policy rate.
Calculations conducted by Ratehub.ca indicate that a homeowner who put a 10 per cent down payment on an average priced home with a five-year variable rate will pay around $87 less per month or $1,044 per year on their mortgage payments.
The Bank of Canada moved its rate lower by a quarter of a percentage point this morning, bringing it down to three per cent.
Ratehub says that should prompt the prime rate to decrease to 5.2 per cent at most Canadian lenders, lowering variable mortgage rates.
It calculates that someone with a variable rate of 4.45 per cent amortized over 25 years, who pays $3,458 per month, would see that drop to 4.2 per cent and $3,371 in monthly payments.
It adds that fixed mortgage rates are also set to decrease slightly as bond yields ticked down to the 2.8 per cent range following the central bank’s announcement, however investor concerns over potential inflation will prevent any “dramatic discounts” in the near future.
This report by The Canadian Press was first published Jan. 29, 2025.
