Bank of Canada Cuts Interest Rates! What does that mean for consumers? The Bank of Canada has lowered its key interest rate by a quarter of a percentage point to 4.75%, the first cut in more than four years. Here’s what it could mean for your finances. The banks turned around and lowered their prime rate from 7.2% to 6.95%.
If you have a variable or floating rate mortgage or line of credit, this is good news for you but for fixed mortgage holders, it has no impact.
The lowering of prime will immediately affect borrowers with variable-rate mortgages, or floating rate secured lines of credit.
Fixed mortgage rates are determined by the bond market, which could be affected by the Prime rate change, and is based more overall on investor confidence. Currently, the bonds are not showing signs of easing, so fixed rates will not drop.
This means to not expect to see your 4.99% mortgage rate drop .25% like prime has change. The fixed rates have not been adjusted today and will only be adjusted if bonds change.
A quarter point cut to a $500,000 variable mortgage with a 6.5% rate to 6.25% will change the mortgage payments by $75/month.
The first months of 2024 are behind us, but signs are emerging that the housing market activity could pick up steam as expectations grow for further rate cuts from the Bank of Canada. The listing counts are up so the inventory is up! If the demand doesn’t pick up, there will be good deals as it will turn into a buyers' market.
The Waterloo Region Association of Realtors update up to May:
There were 1,644 new listings added to the MLS® System in Waterloo Region last month, an increase of 28.9 per cent compared to May last year and a 15.8 per cent increase compared to the previous ten-year average for May.
The total number of homes available for sale in active status at the end of May was 1,741, an increase of 95.8 per cent compared to May of last year and 27.9 per cent above the previous ten-year average of 1,361 listings for May.
Market-wide inventory levels were up 93.8 per cent, with 3.1 months’ supply for all property types at the end of May. The property type that gained the most inventory was the condo apartment segment, which increased by 100 percent. That amounts to 6.0 months’ supply for condo apartments, 2.4 months for detached homes, and 3.6 months for Townhouses. The number of months of inventory represents the amount of time it would take to sell off current inventories at the current sales rate.
The average number of days to sell in May was 16, compared to 14 days in May 2023. The previous 5-year average is 15 days.
There are many deals to be had this month, that won’t be around come the summers as prices and demand will increase. Those that want to buy should be looking now and shop within their approval limits and not worry about the rates but concentrate on the payments.
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