Bank of Canada Reduces Policy Rate by 25 Basis Points!

This morning the Bank of Canada announced its 6th consecutive decrease to its policy interest rate by 25 basis points from 3.25% to 3.00% offering further relief for some Canadians. The Bank of Canada’s policy interest rate is the rate used by lenders to determine their prime lending rate. Therefore, the lender's Prime Rate should be lowered from 5.45% to 5.20% in the coming days. This rate announcement directly impacts any borrowers with variable-rate mortgages and/or secured lines of credit.

FIXED INTEREST RATE MORTGAGE HOLDERS will see NO CHANGE TO THEIR MORTGAGES.

Variable Rate and Adjustable Mortgage Holders: This interest rate drop directly affects variable-rate mortgage holders and lines of credit as variable-rate mortgages are affected by the Bank of Canada’s monetary policy, namely interest rate hikes and cuts that, in turn, impact commercial banks’ prime lending rate. In the coming days, most lenders will drop their Prime rate to 5.20%.

Adjustable-rate variable mortgage holders: You can expect your monthly mortgage payments to go down by approximately $15 per $100,000 or mortgage balance.

Static Variable Rate Mortgage holders: You can expect your interest rate to decrease but your monthly payment will remain unchanged. In turn, more of your payment will go to the principal and less to interest.

Fixed Rate Mortgage Holders: There is NO CHANGE to your interest rate or mortgage details if you are currently in a fixed-rate mortgage. Your interest rate and payment will remain the same for the entire term of your mortgage loan.

The Bank of Canada carries out monetary policy by influencing short-term interest rates. It does this by adjusting the target for the overnight rate on eight fixed dates each year. The remaining 2025 Bank of Canada rate announcement schedule is as follows:

• March 12
• April 16
• June 4
• July 30
• September 17
• October 29
• December 10

As always, if you have any questions please connect with me directly or book a 15-minute call here.