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Writer's pictureVatsal Shah

What the Latest Bank of Canada Rate Cut Means for Homebuyers and Investors!

Vatsal Shah

On October 23, 2024, the Bank of Canada (BoC) announced a 50 basis points cut to its overnight lending rate, reducing it from 4.25% to 3.75%. This marks the fourth rate cut this year, indicating the central bank's continued efforts to support economic growth and maintain inflation around its 2% target. But what does this mean for homebuyers and investors?

This significant rate cut, combined with previous reductions of 25 basis points earlier this year, comes in response to easing inflation rates and a softening labour market. The most recent inflation data showed a drop to 1.6% in September, allowing the BoC to make this substantial cut. The central bank indicated that if the economy remains on track, further rate reductions could be expected in the near future.

Implications for Homebuyers

For Canadians with variable-rate mortgages, this change could translate into notable savings. If you have a variable-rate mortgage with fixed payments, this cut means that a larger portion of your payment will now go towards the principal amount instead of interest, allowing you to pay down your mortgage faster. Meanwhile, those with variable payment mortgages will likely see their total payments decrease, making homeownership more affordable in the current market.

Opportunity for Investors

From an investor’s perspective, lower interest rates open up new opportunities to expand your portfolio. Decreased borrowing costs not only make it easier to finance new investments but also create favorable conditions for increasing property demand. As affordability improves, more buyers who previously couldn’t afford larger homes may shift from townhomes or condos to duplexes and laned homes. This, in turn, could drive up prices as demand rises.

Looking Ahead

While the BoC’s rate cuts this year signal an environment of improving affordability, it’s crucial to be proactive. As demand grows and property values potentially rise, taking action now could help you secure better deals in the market. Furthermore, with another BoC meeting scheduled for December 11, and the likelihood of continued rate reductions, there are still opportunities for investors and buyers to capitalize on.

How We Add Value

Navigating the home buying or investing journey can be complex, but our comprehensive suite of services ensures you have everything you need:

  • Financing Support: We connect you with mortgage specialists, whether you need a top-tier A-Lender or a B-Lender suited to unique cases.

  • Legal Assistance: Our Alberta-based legal partners handle everything from assignments to contract reviews, ensuring your transactions are smooth.

  • Rental Solutions: Our extended team in Alberta offers a one-time lease service at a fraction of the cost, providing an economical alternative to property management companies or listing on MLS.

We’re excited to present the opportunities below and help you make the most informed decision in today’s dynamic market. Source: TD Bank. YOUR MONEY: The Bank of Canada just cut its lending rate by 50 basis points. Here’s how that could impact Canadians. Published on October 23, 2024.

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