The Bank of Canada (BoC) has reduced its policy interest rate to 3%, lowering the Bank Rate to 3.25% and the deposit rate to 2.95%. This move, aimed at stabilizing the economy, comes as the Bank also announces the completion of its quantitative tightening (QT) program, shifting toward a modest expansion of its balance sheet.
What This Means for Mortgage Rates in Canada
- Lower Borrowing Costs: With the policy rate cut, Canadians may see slightly lower fixed and variable mortgage rates, depending on lender adjustments.
- Increased Housing Market Activity: Lower interest rates often boost homebuying demand and refinancing opportunities.
- Inflation and Economic Growth Outlook: Inflation remains close to the 2% target, while GDP growth is projected at 1.8% in 2025 and 2026.
Economic Trends Influencing Mortgage Rates
- Global Economic Outlook: The global economy is expected to grow at 3% annually, with the U.S. leading in consumption-driven growth.
- Labour Market & Wages: Canada’s unemployment rate sits at 6.7%, with signs of improvement. Wage growth pressures are easing.
- Trade Uncertainty: Potential U.S. tariffs remain a risk, which could impact economic stability and future rate decisions.
Looking Ahead: Next Rate Announcement
The next Bank of Canada rate decision is scheduled for March 12, 2025, with a full economic outlook update on April 16, 2025. Future mortgage rate trends will depend on economic conditions, inflation control, and trade developments.
With interest rates at 3%, now may be a good time for homebuyers and mortgage holders to reassess their options. Whether securing a fixed or variable rate mortgage, staying informed about Canada’s mortgage rate trends is important.
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