Welcome back to another episode of Make Money Count! In the latest Bank of Canada announcement, we’ve seen a much-anticipated 50-basis-point rate cut, lowering the overnight rate to 3.75% from its previous 4.25%. This move, which also brings down the prime rate to 5.95%, is great news for Canadian borrowers, especially those with variable-rate mortgages.

Episode Highlights

Lower Prime Rates: A Boon for Borrowers

One of the most immediate effects of the Bank of Canada’s rate cut is the reduction in borrowing costs for those with variable-rate mortgages. The prime rate, which many variable-rate mortgages are tied to, has fallen to 5.95%, and Cannect offers even more competitive rates like Prime minus 1.2%. This means borrowers could secure a rate as low as 4.75%, significantly easing monthly payments.

With further cuts expected in the coming years, we could see prime rates dip even lower. For those considering a mortgage, especially a variable-rate one, now might be an excellent time to take advantage of these favorable conditions.

Predictions for Future Rate Cuts: More Relief for Borrowers?

Economists predict further cuts in the near future, with some estimating the overnight rate could reach 2.5% by the end of 2025. If this happens, the prime rate could fall below 4%, leading to even greater savings for variable-rate mortgage holders. At Cannect, we advise homeowners to carefully consider their options. With future rate cuts expected, variable-rate mortgages may provide more flexibility and better long-term savings compared to locking into a fixed-rate mortgage.

Fixed Rates: What to Expect as Bond Yields Drop

While fixed mortgage rates aren’t directly impacted by these recent cuts, they are influenced by bond yields, which are expected to decline as the economic outlook changes. As bond yields drop, fixed rates should follow suit, creating more attractive mortgage options down the line. For now, Cannect remains committed to offering the most competitive rates on both fixed and variable mortgages. But with future cuts on the horizon, a variable-rate mortgage could be the smarter option for those looking to benefit from lower rates in the coming years.

Now is the Time to Act on Variable-Rate Mortgages

With prime rates falling and more rate cuts expected, now may be the best time to consider or switch to a variable-rate mortgage. Cannect is proud to offer some of the lowest rates available, including Prime minus 1.2%, helping our clients benefit from these economic changes.

However, it’s essential to stay informed about broader economic trends and understand that while lower rates help today, Canada needs a long-term strategy to ensure future growth and stability. At Cannect, we’re committed to being your trusted partner in both good times and challenging ones, helping you make the most informed decisions for your financial future.