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What The FUCK Does a Prime Rate Cut really mean?

What the Bank of Canada’s Rate Changes Mean for You

Are You Ready for a Potential Rate Cut?

Do you know what the Bank of Canada (BOC) impacts mean for you? It's so confusing, right? Many people are unsure about how rate changes affect their mortgages and overall financial situation. Let’s break it down.

What Most People Think

When people hear that the BOC might cut rates, many assume that this means all mortgage rates will drop immediately. However, it’s important to understand the nuances:

  • Fixed rates are already about 1% lower than the current prime rate.

  • Approximately 70% of Canadians have fixed-rate mortgages.

So, What Does This Mean?

If the BOC cuts rates tomorrow (YAY, I hope they do), 30% of people with variable-rate mortgages or with debt tied to the prime rate (like HELOCs and lines of credit) will experience some payment relief. Remember how stressful it was when rates went up by 0.25% in 2022? You’ll feel a bit of relief now as your payments decrease slightly.

Impact on Home Buyers

For those looking to buy, most pre-approvals are for fixed rates, which means you won’t see a change in the amount you can afford. Fixed rates are already lower by 1% compared to variable rate products.

Current Fixed Rate Mortgage Holders

If you’re already in a fixed-rate mortgage, nothing will change for you. You’ll continue to pay based on your original commitment.

The Bigger Picture

Even though the rate cut MIGHT NOT directly affect your mortgage, the overall mindset in the community could shift. News outlets and realtors will talk about it, which could lead to increased market activity. Historically, changes in the prime rate result in more phone calls and inquiries about mortgages. - This is great I want to hear from YOU

For Mortgage Agents

This is the perfect time to get educated on the intricacies of bonds, prime rates, and the differences between VRM and ARM. Knowledge is power, especially when helping clients navigate these changes. - we have coaching about this specifically built into our modules here at BRX send me a DM to learn more about our educational framework and how we can help your business grow through the education and empowerment of your clients and realtor partners. 

Clients, Take a Breath

Before making any drastic decisions, call an experienced broker. It might not be the right time to make significant changes to your mortgage or lifestyle. Avoid emotional decisions. Instead, focus on getting pre-approved, reviewing your budget, understanding affordability, and preparing for your best mortgage decision. If you’re concerned about cash flow, a fixed rate might be your best option.

And for Variable Rate Holders...

If you’re like me and have a variable rate mortgage, tomorrow could be an exciting day! Your payments might go down, your HELOC balance payments could decrease, and if you’re breaking your mortgage, the interest penalty could reduce. These are all the words that we have been waiting for :) If not we can likely expect this to happen in July. 

Stay Tuned

Check back at 10 am tomorrow to see what happens. News and updates will flood in, letting you know how this drop impacts everyone. Don’t stress like I always say plan pre-prepare then perform. I am here to help

Call to Action

Regardless of your situation, if you want to go over your numbers and understand what this means for you and your family, please contact me. I’m here to help you make sense of it all.

Stay Informed and Prepared!


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