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Finally, some long-awaited good news from the mortgage market: the Bank of Canada has made its first rate cut of 0.25% to PRIME. This change is set to have a significant impact on homeowners across the country. If you’re a Variable mortgage or loan holder, expect to receive a notice by mail soon, indicating an immediate decrease in your monthly mortgage payment or amortization.

The Bank of Canada’s decision comes in light of the current state of the Canadian economy and the continued decline in inflation, which is moving closer to the target figures. This rate cut is likely just the beginning, with future rate decision dates scheduled for July 24th, September 4th, October 23rd, and December 11th. This suggests a trend of potential further reductions, aiming to bolster economic stability.

Fixed mortgage rates have also begun to drop, with current rates around 4.89% for a 5-year fixed term. If you’ve been considering switching from a variable to a fixed rate, it might be worth holding steady and reassessing as the year progresses. The dynamic nature of the market could present even more favorable opportunities in the coming months.

In addition to the immediate monthly benefits of lower mortgage rates, this development bodes well for both the real estate and equity markets. In Ontario, where supply remains tight, these decreased rates increase the number of qualified buyers, naturally driving up prices across nearly all price points. The equity market, especially interest-sensitive stocks, also tends to perform better as valuations take into account the “risk-free” interest rate, which is directly correlated with market rates.

Overall, this is positive news that has been anticipated for quite some time. The Bank of Canada’s move is a welcome development for homeowners and investors alike, promising a brighter outlook for the Canadian economy in the months ahead.

For more details on the Bank of Canada’s decision, you can read their official press release here.