Today’s announcement by the Bank of Canada that it is reducing its key interest rate by a quarter point means that lenders will be under competitive pressure to decrease rates for variable-rate mortgages and lines of credit based on the prime rate. However, lenders differ in when exactly they adjust their variable rates. At the same time the US Federal Reserve has today reduced their rates by .75% in an emergency meeting.
Fixed-rate mortgages are not likely to be affected directly by today’s announcement as their rates are influenced primarily by movements in the bond market and not the Bank of Canada’s overnight rate.
With today's Bank of Canada drop, the bank prime rate should lower to 5.75% from 6.00% reducing the rates on variable mortgages and lines of credit.
Taken from email newsletter received from Origin.
