The Bank of Canada cut its overnight lending rate today by .25%. This is the lending rate that mortgage lenders work off when discounting there variable mortgages. What this means to current borrowers with a variable rate mortgage is their mortgage rate will be reduced shortly by their current lender. As a result their mortgage payment will lower as well (unless you have a set pre-payment amount in place). For borrowers with no pre-payment amount in place a smart move is to ask your lender to keep the current mortgage payment the so that the extra money (from the rate reduction) will now go towards paying down your principle. Your lender will contact you directly to let you know when the changes will take effect, this should happen closer to the end of the month.
For new mortgages we are waiting to see how mortgage lenders react. Now that prime is lower at 2.75% (was 3.00%), will they automatically lower their rates using the same discounts currently in place or reduce their discount (current average discount was prime -.60% or 3.00% – .60% = 2.40%) to keep the rate the same. We should know more in a day or two.
If you have any questions about your mortgage or interest rate do not hesitate to contact:
Robert Clancy, AMP,
VERICO Safebridge Mortgage Solutions
SAFEBRIDGE Financial Group
Tel: 416 899-1467
Fax: 1866 385-4049