Interest rate cut spells good news for variable-rate mortgage holders, experts say

2 weeks ago 10

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Published Sep 04, 2024 • 1 minute read

The Bank of Canada building is shown in Ottawa on Wednesday, Sept. 6, 2023.

OTTAWA — Real estate experts say the Bank of Canada’s third consecutive interest rate cut is welcome news for variable-rate mortgage holders, but it could still be some time before significant demand returns to the market.

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The central bank brought its key lending rate to 4.25 per cent on Wednesday amid softness in the economy and easing inflation.

Ratesdotca mortgage and real estate specialist Victor Tran says that for every quarter percentage point decrease, a homeowner with a variable-rate mortgage can expect to pay approximately $15 less per $100,000 of mortgage in monthly payments.

Meanwhile, fixed-rate mortgage holders will not see the effects of any mortgage rate decreases until renewal.

Penelope Graham, a mortgage expert at Ratehub.ca, says the bank’s previous two rate cuts in June and July “did very little to move the dial” on real estate demand as prospective homebuyers wait for more significant decreases before buying.

She says many buyers are likely to remain on the sidelines longer despite the third consecutive cut, given strong anticipation of more decreases to come later this year.

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