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What the Bank of Canada's Rate Drop Means for You


It’s been an exciting week in the mortgage world! The Bank of Canada announced a drop in the overnight lending rate from 3.25% to 3.00%, bringing the Prime Rate down to 5.2%.

This is great news for Canadian borrowers, but you’re probably wondering:


How does this impact me?

I’ve broken it down below based on different types of mortgage and credit products so you can see exactly what this means for you.


Fixed-Rate Mortgage Holders

If you have a fixed-rate mortgage, nothing changes. Your interest rate and monthly (or bi-weekly) payments remain the same. Fixed rates are tied to the bond market rather than the overnight lending rate, so unless you're up for renewal soon, this rate drop won’t affect you.


Pre-Approved Buyers

If your pre-approval is based on a fixed rate, your buying power remains unchanged. The rate drop doesn’t impact your pre-approval, but it’s always a good idea to check in and review your options if you’re actively shopping for a home.


Variable-Rate Mortgage Holders

Did you know there are actually two types of variable-rate mortgages? The way the rate drop affects you depends on which one you have:


Variable Static Rate Mortgage (VRM)

Your payment amount stays the same, but the allocation of that payment changes. With a lower rate, a larger portion of your payment will now go toward your principal, reducing your balance faster while paying less in interest.


Adjustable Rate Mortgage (ARM)

Your payment amount will decrease. Depending on your lender, this change may take effect immediately or within the next billing cycle.

For reference, a 0.25% rate drop on a $100,000 mortgage generally reduces your payment by about $15 per month.


Home Equity Lines of Credit (HELOCs) and Unsecured Credit Products

If you have a balance on a line of credit, your minimum payment will decrease. This could be a great opportunity to accelerate debt repayment while rates are lower. Be sure to check your next statement to see exactly how your payments will adjust.


What’s Next?

If you’re wondering how this rate drop impacts your mortgage strategy—whether you’re buying, renewing, or looking to make a change—it’s a great time to chat. Let’s look at your options and see how you can take advantage of this shift in the market.





Ready to chat about your goals? Visit www.emilycallme.com

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Emily Miszk Mortgage Broker
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