The Bank of Canada has lowered their overnight lending rate – a key rate behind variable rate mortgages – to 0.75%.
Banks’ prime rate, the rate tied to the variable rate mortgages they lend, is set to decrease from 3% to 2.75%, keeping pace with the Bank of Canada’s overnight lending rate. This effectively means that Canadians with variable rate mortgages will see a 0.25% decrease on their mortgage.
But what does that mean for the average Canadian?
Of course, if you hold a variable rate mortgage, you’ll see your effective rate decrease by 0.25%.
For example: If you have a $300,000 mortgage, your monthly payments will decrease by approximately $37.00.
But consider this – why not keep your mortgage payments at the same amount they’ve always been? By keeping your payments at the same amount, you’ll be putting extra cash directly towards the principal of your mortgage. Plus, you have the added benefit of already having budgeted those dollars in your monthly expenses – you won’t notice the difference in your monthly budget.
Lower interest rates certainly come as a positive for Canadians; however, avoid the temptation to use lower rates to take on more debt. Instead, why not take the opportunity to use lower rates to your advantage to get rid of your debt faster?
If you have any questions about the recent rate change from the Bank of Canada or regarding your mortgage, please e-mail me at Kristian@MonsterMortgage.caBACK TO NEWS FEED