What It Means for You!!! – BoC Cuts Interest Rate to 3% – Jan 29 2025
Here is some excellent news to start the year off.
The Bank of Canada has lowered its benchmark interest rate by 25 bps to 3.00%, which means the Prime rate is now 5.2%. This is the Bank’s sixth consecutive rate cut.
“We acknowledge the Bank of Canada’s decision to lower the policy interest rate to 3.00% as a positive step in addressing Canada’s affordability crisis. While this measure provides some relief for middle-class families and offers hope to prospective and first-time homebuyers, there is still much work to be done—especially with the uncertainty of U.S. tariffs. As the voice of Canada’s mortgage industry, we remain committed to advocating for long-term solutions that make homeownership more accessible and sustainable for everyone.”
– Lauren van den Berg, President and CEO of Mortgage Professionals Canada.
The next rate announcement is scheduled for Wednesday, March 12, 2025.
what does this mean for homeowners, buyers, and sellers? Let’s break it down.
Current Homeowners:
If You Have a Variable-Rate Mortgage
- Lower Monthly Payments – A lower interest rate means your mortgage payments go down a little. Giving you extra cash each month.
Trigger Rate Relief – If your variable-rate mortgage was getting close to the point where interest costs were higher than your payments, this rate cut helps slow that down.
If You Have a Fixed-Rate Mortgage
No Immediate Impact – Your interest rate remains the same until renewal.
- Cheaper Renewals in 2025/2026 – If rates continue to fall, you might be able to secure a lower rate when it’s time to renew.
- Refinancing Opportunity? – Considering breaking your mortgage? It might be a good time to run the numbers now. and see if refinancing at a lower rate makes sense.
Impact on Homebuyers:
- More Buying Power – Lower interest rates could mean you qualify for a larger amount of mortgage. Making it easier to afford a more expensive home. !!! But remember, save funds in case the rate goes up again. Do better calculation on your affordability.
Lower Monthly Payments – A 0.25% rate cut can save you $15–$30 per $100K borrowed. For a $700K mortgage, that’s $100–$200 less per month in payments!
Impact on Home Sellers:
While rate cuts don’t directly impact sellers. they make mortgages more affordable, encouraging more buyers to enter the market. With increased demand, we could see faster sales and even stronger prices, especially in competitive areas.
If you’re considering Buying & selling, now might be a great time to take advantage of this shift. Let’s connect to discuss your options and how we can position your home for success.
Looking forward to hearing your thoughts!
Richard Wang 