As we bid farewell to 2024, the Bank of Canada has gifted us a parting present that will keep giving into the new year—a substantial 50 basis point reduction in the overnight rate, now at 3.25%. This latest cut caps off a year of proactive monetary policy adjustments aimed at bolstering economic growth and managing inflation, marking the fifth consecutive decrease.
Quick Overview:
- Bank of Canada’s Latest Rate Decrease: 50bps (0.50%)
- Current Bank of Canada Interest Rate: 3.25%
- Expected Prime Rate for Most Lenders: 5.45%
- Next Bank of Canada Announcement: January 23, 2025
2024 in Review: This year has seen the Bank of Canada lower its rates by a total of 1.75%, starting in June. Each cut has been part of a strategic effort to support an economy that, while growing, has faced various pressures—from fluctuating global markets to domestic challenges like high shelter costs and uneven employment growth.
Impact on Mortgages and Borrowing: This year’s rate reductions directly impact those with variable or adjustable-rate mortgages and lines of credit, offering reduced interest costs and potentially lower monthly payments. It’s an opportune time to assess your financial situation—whether you’re considering refinancing, buying, or renewing your mortgage.
Looking Ahead to 2025: As we turn the page to a new year, the Bank of Canada’s approach remains cautiously optimistic, with a close watch on economic indicators. While the immediate future suggests a pause in rate cuts to assess their cumulative impact, further adjustments remain on the table, dependent on incoming data.
Planning to Buy or Renew?
- For Fixed-Rate Pre-Approvals: Remember, fixed-rate mortgages aren’t directly affected by changes in the policy rate. However, overall market conditions can influence rates, so staying informed is key.
- Renewing Soon? Don’t rush to accept your lender’s initial offer. Explore the market to ensure you’re getting the best possible rate and terms.
Need Personal Advice? The financial landscape is constantly evolving, and navigating it can be complex. I’m here to help you understand these changes and how they might impact your specific financial goals. Please don’t hesitate to reach out for a personalized consultation as we head into 2025. www.chatwithlisareynolds.ca
Wishing you a prosperous New Year filled with health, happiness, and wise financial decisions!
