Mortgage Rates Dropping? What You Need to Do Now.
In March, the Bank of Canada (BoC) announced its first interest rate cut of the year, lowering its key overnight rate by 0.25% to 4.75%. If you’re a homeowner or planning to enter the housing market, you might be wondering: How does this impact my mortgage? More importantly, should I go with a fixed or variable rate?
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Why Did the Bank of Canada Cut Rates?
The BoC’s decision comes as a response to Canada’s slowing economy, cooling job growth, and inflation trending toward the 2% target. After a period of rate hikes to curb inflation, economic data now supports easing borrowing costs to provide Canadians with financial relief.
Immediate Impact on Variable-Rate Mortgages
If you have a variable-rate mortgage or a home equity line of credit (HELOC), this is good news. The 0.25% cut directly lowers your interest rate and monthly payments. On average, for every $100,000 of mortgage balance, your payment could drop by approximately $12 to $15 per month.
At Cannect, we often recommend variable rates for their flexibility. With further rate cuts expected later this year, your payments could continue to decrease, or you could choose to keep payments the same and pay off your mortgage faster.
What About Fixed-Rate Mortgages?
Unlike variable rates, fixed mortgage rates are tied to bond yields rather than the BoC’s overnight rate. However, when the BoC signals economic slowing and controlled inflation, bond yields tend to drop, leading to lower fixed rates.
We’ve already seen fixed rates trending downward in recent weeks. However, they don’t always respond as quickly or predictably as variable rates, making timing a key factor.
Fixed vs. Variable: Which One Is Right for You?
| Feature | Fixed Rate | Variable Rate |
|---|---|---|
| Stability | Same payment for term length | Payment fluctuates with BoC decisions |
| Current Trend | Slowly decreasing | Immediate drop with BoC cut |
| Flexibility | Locked in, penalties for breaking early | Easier to break, more adaptable |
| Best For | Risk-averse borrowers who need predictability | Those comfortable with fluctuations & potential savings |
Cannect’s Take: Why Variable Rates Make Sense Right Now
At Cannect, our goal is to provide unbiased mortgage guidance. With the BoC signaling further rate relief in 2025, we believe variable rates offer key advantages:
- Immediate savings from lower rates
- Potential for further reductions
- Greater flexibility without costly penalties
If you’re considering refinancing, consolidating debt, or accessing home equity, now is a great time to reassess your mortgage strategy. We can help structure a solution that takes advantage of today’s lower rates while positioning you for future savings.
Take Action Now
Whether you’re renewing, refinancing, or purchasing a home, Cannect’s expert team is here to secure the lowest possible rate for you—without unnecessary fees or middlemen.
Let’s connect today! Call us or fill out our quick form to find out how this rate cut can put more money back in your pocket.
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