What the Bank of Canada Rate Drops Mean for YOU!
With the Bank of Canada rate decreases throughout the summer and into September, I thought this would be a great opportunity to update you on what this means for your mortgage.
If you’re on a variable-rate mortgage, this will result in a slight decrease in your mortgage payments to match the current rates giving you more cash flow each month!
For example, if your mortgage balance is $750,000 at the previous 5.95% interest rate your approx. compounded monthly payment was likely $4,809. With the new rate of 5.45% your approx. compounded monthly payment on an adjustable-rate mortgage will be $4,583*. This is an estimated $226/m decrease ($30/m per 100k balance) on your payment.
*Rates based on example of Prime minus .50% (old prime 6.45 and new prime 5.95)
For those of you who are on fixed-rate mortgages* or have renewals coming up, this reduction in interest rates could make it easier on you at renewal time. The decrease in interest rates gives you more borrowing power in the market – this means your money can go further!
*Remember, the drop in the Bank of Canada fixed rates may not result in the same drop for fixed mortgages as with variable rates. The decrease in interest rates will however open up new variable options and, depending on your lender may still provide allow you to take advantage of lowered rates.
This is the same for first-time buyers! Lower interest rates mean you now have more borrowing power in the marketplace, which could help you find that perfect home by allowing you to allocate monthly funds to your mortgage more comfortably.
In more good news, The Bank of Canada has two more decision dates this year in October and December. Experts anticipate the Bank of Canada will continue these quarter-point rate cuts, taking the overnight rate down to 4.0% at year-end and potentially down to 2.75% next year.
Whether you’re a current homeowner, looking to renew, or wanting to purchase, this is exciting news for Canadians across the country!
However, keep in mind rate is not the be-all-end-all of mortgages. It is important to keep in mind that factors such as type of mortgage, down payment amount, payment schedule, amortization, and more will also affect your mortgage and affordability.
If you want more information about your specific mortgage and how this affects your situation, please don’t hesitate to reach out to a DLC Mortgage Expert today!
Published by DLC Marketing Team.
Have questions? Give us a call and we’ll be happy to walk you through the home-buying process.
