In an article published by Le Devoir following the Bank of Canada’s announcement, Véronique Caron, a mortgage broker with Multi-Prêts, explained the practical impact of the policy rate drop from 2.75% to 2.5%. This first reduction since March offers some relief to consumers, particularly those with variable-rate loans.
Immediate Benefit for Variable Rates
Borrowers with a variable-rate loan are the first to benefit from the rate cut. Specifically, a consumer who borrowed $400,000 on a five-year variable-rate mortgage would save approximately $44 per month, calculates Véronique Caron. While this decrease may seem modest, it provides households with a bit more financial breathing room.
What About Fixed Rates?
For fixed-rate borrowers, the change is not as immediate. “Their payment isn’t affected by today’s announcement,” Véronique notes. However, the downward trend already seen in fixed rates could continue, which is encouraging for buyers or those needing to renew their mortgage in the coming months.
More Favorable Conditions Compared to 2023
Véronique Caron also puts recent rate developments into perspective. While some borrowers benefited from rates as low as 1.35% in 2021, those in autumn 2023 faced much more challenging conditions. She points out that recent mortgage rates hovered around 3.99% for fixed and 4% for variable, an improvement over 2023 but still less attractive than those offered in winter 2021.
The Importance of Professional Guidance
With fixed and variable rates, renewal terms, and the evolving real estate market, it isn’t always easy to know which option to choose. That’s where a mortgage broker comes in. At Multi-Prêts, our experts compare available offers, analyze the impact on your budget, and guide you toward the strategy that best suits your needs.