Variable-rate borrowers poised to catch another break from Bank of Canada
Bond market says 85% chance of another rate cut next week
Variable-rate borrowers should catch another break from the Bank of Canada next week. The bond market is pricing in more than an 85 per cent chance of a 25 basis point rate cut on Wednesday.
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On the average existing mortgage, which is $261,023 according to Equifax Canada, that rate drop amounts to roughly $635 savings per year, depending on one’s rate and remaining amortization. That’s not exactly lottery money, but for inflation-weary borrowers, it’s extra breathing room.
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A quarter-point snip would be proof positive from the central bank that last month’s cut wasn’t just a tease. That should also perk up prospective house hunters, who’ve noticed a spike in “for sale” signs lately.
Meanwhile, the more that Canada’s policy rate drops, the more that average mortgage rates will follow, enhancing buyers’ purchasing power. Surveys suggest we need a full percentage point of cuts to really rev up buyer demand, but some buyers will jump the gun anyhow.
On the rate front, we saw a five-basis-point uptick in the leading insured five-year fixed rate this week. There were no other changes of note. The cheapest nationally advertised fixed rates have five-year terms and now stand at 4.99 per cent (uninsured) and 4.49 per cent (insured).
Robert McLister is a mortgage strategist, interest rate analyst and editor of MortgageLogic.news. You can follow him on X at @RobMcLister.
The rates displayed below are updated by the end of each day and are sourced from the Canadian Mortgage Rate Survey produced by MortgageLogic.news. Postmedia and Imaginative. Online Inc., parent of MortgageLogic.news, are compensated by certain mortgage providers when you click on their links in the charts.
