On January 29, 2025, there was some welcoming news from the Bank of Canada (BoC) as they kicked off the first announcement of the year with a .25% rate cut.  This affects our Variable Rate mortgage holders and anyone with loans attached to the prime rate.

As of tomorrow the Prime rate with most banks is coming down to 5.20% which is bringing new variable rate mortgages to the range of 4.20% and 4.90% depending on what lender and the property type.  If you have an Adjustable Rate Mortgage (ARM) this means your payment will come down by roughly $15 for every $100,000 in mortgage amount.  If you have a Variable Rate Mortgage (VRM) then your payment will not change but you will be paying down your principal faster and less towards interest.

The BoC feels that the 2% in rate drops since mid last year has done it’s job that it intended to do which as a result has brought inflation down to a more comfortable level at 1.8%  South of the border today, they also had a rate announcement and did not reduce rates as inflation is on the rise down south.  Our next announcement is March 12 where it is expected that the BoC will leave rates unchanged as everything unfolds however we are still expecting that we should see another .50% in rate drops by mid this year.  That would put the variable rate at roughly around the 4% range.

Below is a snapshot from Dr. Sherry Cooper’s report today, DLC’s Chief Economist, outlining where rates are expected to go in the first half of 2025.

If you would like to read the full article from Dr. Sherry Cooper, check out our blog post and  CLICK HERE