Bank of Canada Cuts Rates: What It Means for Mortgages

The Bank of Canada just announced a 25 bps rate cut, bringing the policy rate to 3%. This means:

✅ Prime Rate Drop – Canada’s prime rate (currently 5.45%) is expected to drop to 5.20%, reducing borrowing costs for variable-rate mortgages, adjustable-rate mortgages (ARMs), HELOCs, and other loans.

✅ Variable-rate mortgage holders will see lower interest costs, meaning more of their payment goes toward paying down principal, but their payments will not automatically decrease unless the lender adjusts them.

✅ Adjustable-rate mortgage (ARM) holders will see an automatic drop in monthly payments, as their payments adjust directly with prime rate changes.

✅ Fixed mortgage rates may decline further as bond yields respond to this shift.

✅ HELOC rates will decrease, lowering interest costs for homeowners using these credit lines.

With quantitative tightening ending in March, markets could see more rate relief ahead, but the Bank also warned of trade risks impacting future cuts.

📅 Next rate announcement: March 12, 2025 – More updates ahead!

Prediction Poll Results & Winner Announcement! 🎉

We had 44 entries in our rate prediction poll:

📌 16 people predicted no change.
📌 26 people correctly predicted a 25 basis point cut.
📌 2 people expected a 50 basis point cut.

🥳 Big congratulations to Nicola Campbell, our contest winner! Thank you to everyone who participated!

If you have any questions about your mortgage or whether now is a good time to lock in a rate, let’s chat! 📞

Best,
Matt Parker
778-897-2554