In a widely anticipated rate announcement today, the Bank of Canada has decided to drop the overnight lending rate by 0.25 per cent to 4.75 per cent. This comes as a welcome relief for many consumers, economists and industry professionals, as Canadians have been weighed down by a high interest for over two years.
This morning’s rate decrease mirrors this sentiment that the Bank of Canada is satisfied with the ease in inflation. That being said, it’s likely that another rate cut might not happen until later in the year as they do not want to be too premature and lead us back into high inflation territory.
Fixed rate mortgages will continue to track the bond market, which moves independent of the prime rate, but decreased borrowing costs will likely offer relief for the fixed rate soon after, as well. Consumer confidence in the market has been high, with many waiting on the sidelines to jump once the central bank signals the first cut.
Advice for homeseekers following the rate cut For individuals looking to purchase within the next four to six months, I’d highly recommend starting a pre-approval sooner rather than later to ensure you solidify your budget; the market moves quickly so the best thing to do is to be prepared. One last note to consider: consumers have been in a high-rate environment for about two years now and we’ve seen prices come down considerably from highs of 2022 due to increased borrowing costs.