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What Will the Bank of Canada do on June 5, 2024?

General Trish Pigott 4 Jun

Home owners and real estate and mortgage professionals have all been waiting patiently for the past two years for some relief in interest rates and June 5, 2024 may be our lucky day!

Last Fridays reporting on GDP (gross domestic product) came in at a disappointing number for the Bank of Canada (BoC) at 1.7% with an expectation of 2.2%  This signals a weakened economy in simple terms. This along with all other data collected over the past few months such as inflation and employment, is what we have been waiting for to have enough of an impact to trigger our first rate drop.

Keep in mind, this weeks rate announcement if it does drop, will only affect the Variable Rate mortgage holders or anyone with a loan attached to Canada’s prime rate of 7.20%.  We may see that come down to 6.95%  if we are all lucky.  After Friday’s announcement on GDP, 75% of economists are predicting a rate cut, up from 66% last Thursday.

The Fixed rates are affected by the Bond market which did see a drop in as well with Friday’s news so we could potentially see fixed rates being affected tomorrow as well but we will report more on that on June 5th.

So many home buyers are waiting on this announcement before making any sort of move but what some are forgetting is that the minute we see a slight reduction in rates, the market will pick up steam and offers become more competitive and often end up over asking.  So if you are waiting to see, be reminded that there is no time like the present as today you could be the only offer yet as soon as rates drop, there will most likely be many more home shoppers out there costing you a lot more in purchase price than the slight difference in rate.

Here’s a few quick reminders;

  • If rates drop by .25% next week, it means about $16 per month for $100,000 in mortgage
  • Most home buyers and home owners are choosing the 3 year fixed rate right now as it’s over 1% less than the current Variable Rate so they will not be impacted by the next announcement
  • Getting  Pre-Approved and Pre-Qualified is your best attempt at a smooth offer without any delays or extensions needed. Always be prepared and get the process started in advance of looking at properties

Stay tuned for tomorrows full details once the BoC announces it’s next move.