Bank of Canada Interest Rate Update - June 2024

 Hi Everyone!!

Two exciting announcements this week!! Firstly, our team came 2nd in the BEST of Kelowna contest!! Thank you so much to all of you for your thoughtful reviews and votes!! It means the world to us!

And of course the BIG news… The Bank of Canada (BoC) met on June 5th, and made the decision to DROP RATES BY 0.25%. The first drop in our prime lending rate since March 2020, and very news for all of us variable rate borrowers!!

It has been quite the roller coaster ride of inflationary news over these past few months, and I don't expect that to change too much. Although it is believed that we are now on the downward path for interest rates, expect bumps along the way. With that said, inflation eased to 2.70% in April 2024 (down from its peak of 8.10% in June of 2022), so we are on the right path, and the BoC has reinforced that they are confident that inflation will continue its move to the 2% target.

To read the official June 5th announcement, please click HERE

The market is now pricing in a total of 0.50% to 0.75% in further rate cuts before the end of this year. From there, the expectation is that we should see variable rates down by another 1.00% between 2025 and 2026.

Even though rates are now starting to fall, we are nowhere near out of this challenging economic time and the pain that Canadians are feeling with their higher housing costs and the general cost of living. My top recommendation continues to be that we must ensure your financial house is in order so that you are better able to weather this storm, and I am here to help you through this. Please do not wait to reach out to me until it’s too late. If you have any high interest debt or are struggling with your payments, I am here to help. And if you have a mortgage that is coming up for renewal in 2024 or 2025, please reach out to me so that we can work together on a plan to ensure you are prepared.

What does this rate announcement mean for you?

Variable rate mortgage holders: Will see a reduction in your payment by $15 for every $100,000 in mortgage funds, depending on your rate, amortization, etc.

Home Equity line of credit (HELOC): Will see a reduction in your payment by $20 for every $100,000 in mortgage funds

If you are in a "fixed payment - variable interest" product...

No changes to your payments - but thankfully you are starting to pay a little less interest

$20 less interest for every $100,000 in mortgage funds, depending on your rate, amortization, etc.

If your payments have not yet changed, then you have likely hit or passed your "Trigger Rate", and you may be nearing your "Trigger Point". It is important that you understand the consequences of this, so please reach out to me so that I can explain your specific situation and my recommendations for what to do.

Should I lock-in my variable rate now?

If locking-in to a fixed rate is something you are considering, let's talk. You may want to consider a short term fixed rate, which can offer you the fixed comfort today while still being able to renew at a time when rates are (hopefully) lower. 

I am personally going to continue to ride this out in my variable rate mortgages, as the current lock-in rates are too high for it to make sense for me. However, my budget can support the risk of staying variable, and the lock-in rates today don't work for my situation. I do feel that there may be a time in the next 6-12 months where locking-in could make sense, and I will continue to monitor things and keep you informed. However, if locking-in now feels best for you, please let me know and I can support you through it!

Some of our lowest fixed rate options available today:

• 1 year fixed @ 6.74%*

• 2 year fixed @ 6.09%*

• 3 year fixed @ 4.99%*

• 4 year fixed @ 4.94%*

• 5 year fixed @ 4.84%*

*Conditions apply

I want to lock-in to a fixed rate, what do I do now?

Contact your lender directly and ask them what rate they will offer you to lock-in. Request all terms available to you, including 2 or 3 year rates if possible. Once you have that information please send it to me and I will help you with a strategy.

Our team is here to support you every step of the way! 

I hope that you have an amazing weekend!