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This morning, the Bank cut its policy rate by 25 basis points, lowering it to 3.00%. This is the sixth straight rate cut and will result in a lower prime rate—which affects variable-rate mortgages and other loans.We anticipate most lenders will lower their prime rates to 5.20% in the coming days, with TD Bank’s mortgage prime, which is priced slightly higher, likely dropping to 5.35%.If you’d like to read more details, you can find the full statement from the Bank of Canada here. How does this impact you?
For variable-rate mortgage holders: You may see a drop in your interest costs soon. If your payments are fixed, a larger portion of your payment will go towards your principal balance. If your payments adjust with the prime rate, your monthly payment should decrease by about $14 per $100,000 of mortgage debt (on a 25-year amortization).
If you have a fixed-rate mortgage: Your payments won’t change for now, so you can expect no immediate impact.
Other loans tied to the prime rate: Personal loans or lines of credit will also see interest charges decrease.
Looking aheadThe Bank of Canada’s next rate decision is scheduled for March 12, so there will be plenty of economic data released in the meantime that could influence the Bank’s next rate decision. As always, if you’d like to discuss how this change affects your mortgage or explore your options, I’m here to help!
Nikole Rolof
Mortgage Broker Edmonton & Area