The Bank of Canada has delivered its first rate cut, lowering its key lending rate by 25 basis points to 5.00%.

This is the central bank's first rate cut since the pandemic in March 2020. 

In its statement, the Bank said, "With continued evidence that underlying inflation is easing, Governing Council agreed that monetary policy no longer needs to be as restrictive."

While risks to the inflation outlook remain, the Bank added that recent data has "increased our confidence that inflation will continue to move towards the 2% target."

Click here to read the Bank of Canada's full statement. 

What this means for your mortgage

• Variable-rate mortgages: Prime rate, upon which variable-rate mortgages are priced, is expected to fall to 6.95% at most major lenders in the coming days (excluding TD, which has a mortgage prime rate priced 0.15% higher).
• Fixed-rate mortgages: Your mortgage term remains unaffected by this announcement.

Looking forward

The Bank's next rate decision is scheduled for July 24, 2024. 

Whether or not the Bank of Canada will deliver another rate reduction at its next meeting remains dependent on economic performance between now and then. 

Should you have questions or wish to discuss adjustments to your mortgage strategy in light of these developments, please don't hesitate to reach out.

Wednesday, June 5, 2024