Bank of Canada cuts key interest rate to 4.75 - How does that impact 1st-time homebuyers and homeowners?
Posted by Geordie Morison on
For the first time since the early days of the COVID-19 pandemic, the Bank of Canada (BoC) announced on June 5 a reduction in its overnight interest rate from 5% to 4.75%. What does this mean for homebuyers and homeowners?
While the 0.25% cut won't drastically change things immediately, it's seen as the start of a trend toward lower rates, which will reduce mortgage costs over time.
The BoC's rate influences the interest rates that banks charge for mortgages and loans. This means that people with variable rate mortgages may soon see lower payments as their rates adjust downward.
The impact on your variable rate mortgage depends on its structure:
- If your payments change with your lender’s prime rate, they may decrease automatically.
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