On January 29th, the Bank of Canada (BoC) announced a 25 basis point rate cut, lowering the policy rate to 3%. Alongside this, the BoC also signaled its plan to end quantitative tightening, a move aimed at further stabilizing the economy.
So, what does this mean for homeowners, buyers, and sellers? Let’s break it down.
Impact on Current Homeowners:
If You Have a Variable-Rate Mortgage
- Lower Monthly Payments – With a lower interest rate, your mortgage payments will decrease slightly, freeing up some cash each month.
- Trigger Rate Relief – If your fixed-payment variable mortgage was approaching its trigger rate (where interest exceeded payments), this cut helps slow that down.
If You Have a Fixed-Rate Mortgage
- No Immediate Impact – Your interest rate remains the same until renewal.
- Cheaper Renewals in 2025/2026 – If rates continue to fall, you might be able to secure a lower rate when it’s time to renew.
- Refinancing Opportunity? – If you’re considering breaking your mortgage, now might be a good time to run the numbers and see if refinancing at a lower rate makes sense.
Impact on Homebuyers:
- Increased Buying Power (Qualify for a Larger Mortgage) – With lower rates, your mortgage approval amount may increase, allowing you to afford a more expensive home.
- Lower Monthly Payments: A 0.25% rate cut can reduce payments by $15–$30 per $100,000 borrowed. Example: On a $700,000 mortgage, this could save you $100–$200 per month.
Impact on Home Sellers:
While a rate cut doesn’t directly impact sellers, it makes mortgages more affordable, bringing more buyers into the market. Increased demand could lead to faster sales and even higher prices in competitive areas.
Final Thoughts
This rate cut is a positive signal for the real estate market. Whether you’re a homeowner, buyer, or seller, now is a great time to review your mortgage options, explore refinancing, or prepare for a more competitive housing market.
💬 Thinking of buying, selling, or refinancing? Let’s chat! 🚀
Fisher Yu
📱 647.598.8488
📞 877.539.3229
✉️ [email protected]
🔗 Thefishergroup.ca
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