Bank of Canada Interest Rate Update - September 2024
The Bank of Canada (BoC) met on Sept 4th, and made the decision to once again DROP RATES BY 0.25%. We are absolutely moving in the right direction! And for all of us variable rate mortgage borrowers, fingers crossed for more good news to come over the coming months.
To read the official Sept 4th announcement, please click HERE
Although it is believed that we are now on the downward path for interest rates, expect bumps along the way. The market is pricing in potentially 0.75% in rate cuts by January 2025, with the Bank of Canada cutting at each of their upcoming meetings. From there, the expectation is that we should see variable rates down another 1.00% by 2026.
It is expected the fixed rates should level out to their lowest of this cycle in about 6-12 months, if we stay on the current economic path. And we are already seeing some nice reductions in fixed rates with many of our lenders.
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?
Adjustable 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
Variable rate mortgage holders: $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, but 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.
Some of our lowest fixed rate options available today:
1 year @ 6.29%
2 year @ 5.34%
3 year @ 4.34%
4 year @ 4.59%
5 year @ 4.24%
*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.
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