Bank of Canada Reduces Policy Rate by Another 50 Basis Points!

December 11, 2024

This morning (December 11, 2024) the Bank of Canada announced another decrease to its policy interest rate by another 50 basis points from 3.75% to 3.25% offering more relief to 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 5.95% to 5.45% in the coming days. This rate announcement directly impacts any borrowers with variable-rate mortgages and/or secured lines of credit.

No CHANGE for Fixed Interest Rate Holders.

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 5.45%. Most variable-rate borrowers can expect their monthly payments to go down by approximately $30 for every $100K borrowed (based on a 25-year amortization).

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. Today was the last announcement for 2024. The 2025 Bank of Canada policy interest rate announcement schedule is as follows: