Impact of Bank of Canada's Rate Cut on Variable Mortgages and Housing Market
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The Bank of Canada's recent 25 basis point reduction, lowering the key overnight lending rate to 4.75%, raises questions about future rate drops and their financial impact on average five-year variable mortgage holders. A report examines these effects, highlighting potential savings in major Canadian cities.
In cities like Toronto and Vancouver, homeowners can expect significant savings due to the rate drop. Toronto's average monthly payment decrease is about $155, leading to an annual saving of $1,860, while Vancouver sees a monthly change of $166.20, resulting in over $1,994 in yearly savings. Even in Regina, the most affordable city, the rate change offers savings, with an average monthly decrease of $75.60, totaling $907 annually. Additional savings could arise with further rate cuts, with the next BoC announcement scheduled for July 24, 2024.
High borrowing costs are a significant barrier for current and prospective homeowners. A 2024 survey revealed that over half of non-homeowners cited high prices as the primary reason for not purchasing a home. Carrie Lysenko, CEO, notes that lower lending rates will likely encourage prospective buyers to enter the market, increasing sales activity and potentially driving up prices.
Read the full article on: REAL ESTATE MAGAZINE
