Major Key Rate Reduction by the Bank of Canada
The Bank of Canada has just announced a significant decrease in its key interest rate, dropping from 4.25% to 3.75%. This 0.5-point reduction represents excellent news for homeowners with variable-rate mortgages.
Concrete Impact on Mortgage Payments
Example 1: $400,000 Mortgage over 25 years
- Variable rate: from 5.35% to 4.85%
- Monthly savings: $118
- Annual savings: $1,416
Example 2: $350,000 Mortgage over 18 years
- Monthly savings: $103
- Annual savings: $1,236
Example 3: $650,000 Mortgage over 27 years
- Monthly savings: $193
- Annual savings: $2,316
Understanding Variable vs Fixed Rates
Variable rates adjust immediately to Bank of Canada decisions, while fixed rates are influenced by the bond market.
Real Estate Market Outlook 2024-2025
Downward Rate Trend
- Key rate drop from 5% to 3.75% since summer
- Forecasted to reach 2.75% by mid-2025
Quebec Real Estate Market Status
- Median single-family home price: $448,550 (+7%)
- New government measures:
- FHSA (First Home Savings Account)
- 30-year amortization
Importance of Mortgage Brokers
In this context of constant changes, the role of mortgage brokers becomes crucial for:
- Analysing your personal situation
- Determining the best rate type
- Optimising your mortgage structure
Conclusion and Recommendations
Despite lower rates, homeownership remains challenging. Careful planning and professional guidance are essential to navigate this complex market.
