Happy New Year! As 2025 begins, we’ve received some encouraging news from the Bank of Canada—a reduction in the overnight rate to 3% and an end to the practice of selling off assets, known as quantitative tightening. These steps aim to strengthen our economy and make borrowing more affordable.
Impact of the Rate Cut and Market Adjustments: With this new adjustment, most lenders are expected to set their prime lending rate at 5.20%. This change is designed to lower borrowing costs, which is excellent news if you have an adjustable-rate mortgage or a home equity line of credit (HELOC). For example, borrowers with adjustable-rate mortgages or HELOCs could see their monthly payments decrease by approximately $14 per $100,000 borrowed. This reduction is part of the Bank’s broader effort to encourage spending and investment by households and businesses.
Looking Ahead in 2025: Globally, the economic outlook remains mixed—the U.S. shows strong growth, while Europe and China face more significant challenges. However, here at home, thanks to recent rate cuts, there’s an upbeat outlook for consumer spending and the housing market, which are beginning to show signs of strength.
Trade and Tariffs: We are also watching developments in trade, particularly with the new U.S. administration’s stance, which could impact our economy. The potential for trade conflicts adds an element of uncertainty, but the Bank of Canada remains committed to adjusting its policies as needed to support economic growth.
What This Means for You: Whether you’re considering buying a home, refinancing your mortgage, or adjusting your investment strategy, these updates are crucial. I’m here to help you navigate these changes and plan the best path forward for your financial circumstances.
Let’s take on 2025 with informed decisions and optimism. Please feel free to contact me to discuss how these changes can benefit your financial plans.
Unsure how today’s announcement impacts you? Let’s Chat! www.chatwithlisareynolds.ca
