This March, the Bank of Canada announced its first rate cut this year, lowering its key overnight rate by 0.25% to 4.75%. For many Canadians who are navigating the housing market or managing existing mortgages, this move raises an important question: How does this affect my mortgage, and should I consider fixed or variable rates?
Why Did the Bank of Canada Cut Rates?
The BoC’s rate cut is a response to Canada’s slowing economy, softer job growth, and inflation finally easing toward its 2% target. While rate hikes were necessary over the past two years to control inflation, the economic data now supports giving Canadians some relief by lowering borrowing costs.
Immediate Impact on Variable Mortgage Rates
This is good news if you currently have a variable-rate mortgage or a home equity line of credit (HELOC). The 0.25% cut directly lowers your interest rate and monthly payment. For every $100,000 of mortgage balance, you could see a reduction of approximately $12 to $15 per month.
At Cannect, we often recommend variable rates because of their flexibility—and this recent rate cut shows why. Further cuts are expected later in the year, which could continue to lower your payments or allow you to pay off your mortgage faster by keeping costs the same.
What About Fixed-Rate Mortgages?
Fixed mortgage rates are influenced by bond yields, not the BoC’s overnight rate directly. However, when the BoC signals that the economy is slowing and inflation is under control, bond yields often drop, leading to lower fixed rates.
Over the past few weeks, we’ve already seen fixed rates trending downward. But these rates don’t always fall immediately or predictably as variable rates, so timing matters.
Fixed vs. Variable: Which Is Better Right Now?
| Feature | Fixed Rate | Variable Rate |
| Stability | Same payment for term length | Payment can fluctuate with BoC decisions |
| Current Trend | Slowly decreasing | Immediate drop with BoC cut |
| Flexibility | Locked in: penalties for breaking early | Easier to break, more adaptable |
| Who It’s For | Risk-averse borrowers who need predictability | Those who can handle slight fluctuations & want to benefit from potential further cuts |
Cannect’s Take: Why Variable Rates Might Win
At Cannect, we’ve always believed in giving you unbiased guidance. Right now, with the BoC signaling further rate relief in 2025, variable rates offer a clear advantage for borrowers who want to:
- Take immediate advantage of lower rates
- Benefit from future cuts
- Maintain flexibility without heavy penalties
Plus, if you’re looking to refinance, consolidate debt, or tap into your home’s equity, now is an ideal time to reassess your mortgage strategy. Our team can structure a solution that not only gives you access to today’s lower rates but also sets you up to capitalize on upcoming changes.
Ready to Take Advantage of Lower Rates?
Whether you’re renewing, refinancing, or buying, Cannect’s expert team is here to get you the lowest rate possible without unnecessary fees or middlemen.
Let’s connect today. Call us or fill out our quick form, and we’ll show you how this rate cut can put more money back in your pocket.
Related Reads:
Is Now the Right Time to Refinance Your Mortgage?
Variable Rate Mortgages are the Smarter Choice Right Now
Watch our Make Money Count videos for more insights.
