Posted On Dec 11, 2024
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December 11th, 2024, the Bank of Canada announced a 0.5% reduction in its key interest rate, bringing it to 3.50%. This change specifically impacts variable-rate mortgages and loans, which means those with these types of loans may see their monthly payments decrease. However, fixed-rate mortgages remain unaffected by this adjustment, as these rates are determined by the bond market. Currently, the bond market remains high, and we are actively monitoring the situation. If there are any future fluctuations in fixed rates, whether an increase or further decrease, we will keep you updated with the latest information.
For those of you who may not know, since June, the Bank of Canada has decreased their rates five times. These rate cuts, including the most recent one relased today, are part of the Bank's ongoing efforts to stimulate economic growth. The Bank has been working to keep inflation close to its 2% target and support overall economic stability. While these cuts are part of a broader strategy, they are mostly felt in variable-rate products, such as variable-rate mortgages and lines of credit.
How Does the Latest Update Affect Your Variable Rate Mortgage?
If you or someone you know holds a variable-rate mortgage, this recent rate change will have a direct impact. For instance, if your current rate is 5.45%, the .5% will lower your rate to 4.95%. This adjustment offers an opportunity for reduced borrowing costs, making it a favorable time for those with variable-rate mortgages to benefit from lower rates.
In addition to the interest rate changes, there are important updates to mortgage rules that will take affect:
- A $1.5M price cap for insured mortgages.
- 30-year amortization options now available for first-time homebuyers.
- 30-year amortization options for all new home builds.
These rule changes, which will take effect on December 15, 2024, are designed to stimulate market activity and help buyers manage their mortgage payments. If you’re considering purchasing a home, these updates could affect your options and purchasing power. It’s important to review your situation and explore how these changes may impact your next steps.
If you have any questions about how these interest rate changes or mortgage rule updates might affect you, I offer a free mortgage app with great tools that allow you to explore all your mortgage options at your own pace, with no pressure—giving you the freedom to make the best decision for your needs.
Follw along for the next Bank of Canada rate update on January 29, 2025, and we’ll keep you posted on any future changes.