top of page

7 Ways This Cut to PRIME Could Impact Your Mortgage Experience and Overall Cost as a Homeowner

The Bank of Canada (BoC) has dropped the rate by 25 bps, and as an adjustable rate mortgage holder and mortgage broker, I couldn't be happier to be frantically typing this blog post on this glorious day (which also happened to be my birthday) – double YAY! Let's dive into the potential impacts on you as a homeowner, keeping in mind these are historical trends, not predictions. #ihavenocrystalball

1. Increased Demand

Rate cuts often lead to easier qualification, more purchasing power, improved homebuyer sentiment, pent-up demand, FOMO, increased investor interest, economic stimulus, and more rate-driven refinances. A small quarter-point drop may not cause a flood of mortgage applications, but it will be more than today's trickle. Assuming no major re-inflation and if history is a guide, mortgage growth could rise from 3.33% back to its 10-year average of 6.25% within 18 months. With higher demand, expect longer turnaround times, as lenders might not hire to handle the spike. Starting the client journey sooner can help reduce stress and ensure a better experience. So like I always say… start the process now!

2. More Floating Rates

A few more dovish inflation reports could pave the way for multiple rate cuts, encouraging more variable-rate borrowing. Adjustable-rate lenders could see increased activity, as more borrowers might opt for floating payments that offer immediate payment relief. Most of my current clients are in fixed rates, so I don’t see this being a massive increase, but some clients might switch to floating rates for overall cost savings and exit strategies (think variable/adjustable offer 3 months interest penalty when the term is broken).

3. Improved Short-Term Rates

Pricing on short-term loans will likely improve. One-year yields just hit a one-year low recently, suggesting we could soon see uninsured nationally available one- and two-year rates in the 5% range. However, this also means higher fixed-rate prepayment penalties, making refinancing less appealing for those needing to break fixed mortgages. REMINDER: If you are buying and selling, contact your broker (me) ASAP to understand penalties, as the gap increases will trigger HIGH penalties for some buyers, impacting future buying power (think proceeds).

4. Reduced Renewal Risk Panic

The looming renewal payment shock has worried many for over a year – myself included. The overall cost of living is EXPENSIVE. If the forward market’s outlook of a 175+ bps drop in rates over the next few years holds, that shock won’t be as crippling. Despite potential financial strain, this likely won’t trigger the feared wave of defaults, especially with federally mandated mortgage relief, steady income growth, and a liquid housing market in most regions. However, the non-federally-regulated market may still see more borrower pain due to stricter qualifying regulations. Think private mortgages, etc.

5. Concerns About Home Price Inflation

Home values have been stable despite the prime rate being at a 23-year high and record unaffordability. If rates keep dropping and employment or immigration remains stable, we might see a rise in home prices before the year ends. Markets with strong fundamentals and momentum, like Calgary, could see even faster growth. What this means? Homeowners will need to put more down with higher prices and might be looking at multiple offers again soon.

6. More Early Renewal Offers

With a high number of renewals and refinances on the horizon, lenders are likely to step up their retention efforts. This means more early-renewal offers, which will come more frequently and earlier. Switching can often be easier and less costly than clients think, providing an excellent opportunity for client outreach, especially when maturity dates are near or prepayment charges are manageable. That is exactly what I do, so if you are looking for help, please give me a call today to discuss these options.

7. Increased Investor Activity

Current rates make purchasing for positive cash flow a challenge, but multi-year cash flow forecasts look better for those with adjustable-rate rental financing. Well-capitalized investors may take the first BoC cut as a signal to dive back into real estate, opting for short-term or floating loans.


While it's exciting to speculate about potential changes, most clients have been opting for fixed rates. If you already have a fixed rate, this BoC rate drop won't impact your current payment or rate for your existing fixed-rate term. That being said, if you are looking to sell, the rate changes could impact your penalty cost. Loop me in for a second opinion, or if you have any predictions or thoughts, we'd love to set up a call with you today to discuss. Visit to book a call anytime.

How the Rate Cut Could Benefit You 🏠💰

For Those Who Already Have a Mortgage:

  • Adjustable Rate Mortgage: Expect to see your costs and payments go down roughly $14 per month per $100,000 you owe. If you have an adjustable rate mortgage (often offered by lenders like Scotiabank), your payments will adjust with the rate changes.

  • Variable Rate Mortgage: Your cost will decrease by roughly $14 per month per $100,000 you owe. However, if your mortgage has static payments (common with lenders like TD), your payments won’t decrease unless you contact your lender to request a manual adjustment.

  • Home Equity Line of Credit (HELOC): Your cost and interest-only payments will decrease by approximately $21 per month per $100,000 you owe. If you are carrying a balance here the rate could still be over 7% and it may be wise to consider blending this debt into your mortgage.

  • Fixed Rate Mortgage: No changes. Your rate and payments remain the same throughout the term. Fingers crossed bonds continue on a downward trend.

For Those Getting a Mortgage (Pre-Approved or Approved):

  • Variable Rate, Home Equity Line of Credit, Adjustable Rate Mortgage: Your prime rate will lower, resulting in lower payments and costs (about $14 per $100,000 lower). This means more money in your pocket each month!

  • Fixed Rate Mortgage: No immediate changes as fixed rates are based on bond yields, not the overnight lending rate cut. However, if bond yields continue to drop, we might see better fixed rates soon. Non-insured 3-5 year fixed rates could drop to around or below 5%, and insured 3-5 year fixed rates could hit approximately 4.6%.

Not Sure If Your Mortgage Is Variable or Adjustable? 🤔

If you're unsure whether your mortgage is variable or adjustable, or how this rate drop will impact you, contact your mortgage broker or banker to clarify. It's crucial to understand your mortgage type to make the most of these changes.

For personalized advice, book a call at Let's chat and make sure you're getting the best deal possible! 📞💬


bottom of page