Ottawa Mortgage Blog

The moment we've all been waiting for is finally here—a rate cut by the Bank of Canada! It’s been a challenging period for Canadians with rising interest rates and climbing prices across the board, squeezing household budgets. The June 5th rate cut of 0.25% is the first one since the early days of the pandemic, and it couldn't have come at a better time. Let's dig into what this means for you and the broader economy.

One of the most immediate effects of the rate cut was on variable mortgage rates. Existing variable rate mortgage holders and new applicants can now enjoy a 0.25% reduction in their interest rates. Although it is a small impact, this change translates to slightly more manageable mortgage payments and a little more breathing room in the family budget.

While the primary impact was on variable rates, fixed mortgage rates also saw some movement, although less pronounced. Following the rate cut, bond yields dipped significantly. This dip allowed mortgage lenders to lower some fixed mortgage rates, particularly for longer-term options like 3-5 year terms. However, these reductions were generally less than the 0.25% cut implemented by the Bank of Canada.

The broader economic implications of this rate cut are substantial. Lower interest rates generally encourage spending and borrowing, which can help stimulate economic growth. Lower rates also mean reduced mortgage payments for homeowners, making it easier to manage household finances. For potential homebuyers, this could be an opportune time to enter the market with more favourable mortgage terms. Here is a list of some of the best mortgage rates on the market, NOTE that these rates will not apply to all situations:

While this rate cut is a positive development, many wonder if more are on the horizon. Predicting the timing and magnitude of future rate cuts is challenging due to the numerous factors influencing economic policy. However, the hope is that we will see more rates easing sooner rather than later.