The Bank of Cananda Lowers its Prime Rate
On June 5, 2024, The Bank of Canada made the decision to cut its overnight prime lending rate by 0.25% to 4.75%. If the banks follow suit, which they are expected to, this reduces internal bank prime rate to 6.95% with most lenders.
This is the bank’s first rate cut since March 2020.
The Bank of Canada confirmed that inflationary risks remain high, but the recent data has increased their confidence that inflation will continue to move towards the 2% target. If this trend continues, it could mean additional rate cuts this year.
Click here to read the Bank of Canada’s full statement.
What this means for your mortgage:
Variable/Adjustable-rate mortgages: Prime rate, upon which variable-rate mortgages are priced, is expected to fall to 6.95% at most major lenders in the coming days (excluding TD, which has a mortgage prime rate priced 0.15% higher). This will reduce your rate. This also includes applicants with HELOCS (Home Equity Line of Credit).
Fixed-rate mortgages: Your mortgage term remains unaffected by this announcement. In the weeks or months ahead, we could see reductions to fixed rates as a trickledown effect to yield's/bonds but it’s too early to tell.
Active Application or Pre-Approval: If you have an active mortgage approval or if you are currently home shopping with a pre-approval in place, please be rest assured that we are watching rates on your application and working behind the scenes for possible decreases.
The Bank's next rate decision is scheduled for July 24, 2024.
Please contact us for your mortgage related inquiries!