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The Bank of Canada announced on July 24th that they will cut their policy interest rate by 25 bps which brings the current overnight rate to 4.50%. 

Key Takeaways

  • The Bank of Canada has cut their policy interest rate, which brings it to 4.50% as of their latest interest rate announcement
  • The next interest rate announcement is on Wednesday, September 4, 2024.
  • Talk to an experienced mortgage advisor to understand the announcement’s impact on your mortgage payment or upcoming renewal

Why did the Bank of Canada cut interest rates? 

Commentary from Perch’s CEO and Principal Mortgage Broker, Alex Leduc:
The latest Bank of Canada interest rate announcement occurred on July 24th. The Canadian economy is showing signs of weakness and inflation has come in a bit under expectations, which prompted the Bank of Canada to feel comfortable administering more monetary loosening by cutting rates.

What does this mean for my mortgage with Perch? 

  • For variable rate mortgages (meaning your payments don’t fluctuate as prime rates change): Today’s decrease means that less of your existing mortgage payments go towards the interest portion of your mortgage as your amortization decreases, but your payments will stay the same. Use our Mortgage Renewal Calculator to get an estimation of what your expected rate and payment will be at your maturity date. If the payment isn’t manageable, connect with your advisor well in advance to look at all options.
  • For adjustable rate mortgages (meaning your payments fluctuate as prime rates change): The latest cut will further decrease your mortgage payments and the outlook shows that further cuts from the Bank of Canada are expected throughout 2024 and into 2025 to further reduce your mortgage payments.

In the chart below, you can see how our 5-year variable rate forecast has changed over time based on the Bank of Canada’s interest rate announcements. (Like what you see? Sign up to get free, personalized mortgage insights and our monthly mortgage outlook!)

The current focus for the Bank of Canada remains bringing inflation back in line with the targeted 2%. The Bank of Canada is anticipated to continue cutting rates in late 2024 to the end of 2026. During the next few years adjustable rate mortgage holders are likely to see lower payments.
Related: Why are variable rates higher than fixed rates?

Buying now gives you the opportunity to lock in a lower purchase price in today’s market, benefitting you in the long run. Think of it this way: You date the mortgage payment, but you marry the purchase price.
In other words, your mortgage payment can fluctuate as you change terms, but your purchase price remains the same.
We increasingly see new buyers opting for a shorter mortgage term with a higher amortization to minimize their monthly payments. This enables them to potentially renew at a lower rate a few years from now, and in the long run, accelerate their amortization to pay off their mortgage earlier.

Where will mortgage rates be in 2024?

According to financial models by Alex Leduc, Principal Broker at Perch, 5-year variable mortgage rates should start dropping in late 2024.

Will mortgage rates go up in the next 5 years?

Based on our latest Mortgage Rate Outlook, expect 5-year variable mortgage rates to start dropping in 2024 and continue doing so into 2025. We’ll be updating our mortgage rate forecast after every Bank of Canada interest rate announcement – you can subscribe to our mortgage rate forecast for free.

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What is the Bank of Canada interest rate today?

The current Bank of Canada interest rate sits at 4.50%, with a 0.25% rate cut announced on July 24, 2024.

When is the next Bank of Canada interest rate announcement?

The next scheduled Bank of Canada interest rate announcement is Wednesday, September 4th, 2024 at 9:45 AM ET.

What are the interest rate announcement dates in 2024?

There are a total of 8 Bank of Canada interest rate announcements each year. The dates for 2024 are as follows:

  • Wednesday, January 24, 2024
  • Wednesday, March 6, 2024
  • Wednesday, April 10, 2024
  • Wednesday, June 5, 2024
  • Wednesday, July 24, 2024
  • Wednesday, September 4, 2024
  • Wednesday, October 23, 2024
  • Wednesday, December 11, 2024

(Source: Bank of Canada)
The Bank of Canada typically makes their interest announcement at 9:45 AM Eastern Time.

Here’s what else we’re reading:

Understanding the benefits of rate holds (3 min read time)
Fixed or Variable? How to choose the right mortgage for you (4 min read time)
Mortgage switch vs mortgage renewal (4 min read time)

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