The Bank of Canada just announced a rate cut, lowering the prime rate from 5.45% to 5.2%. If you’re a buyer, seller, or homeowner, you might be wondering—does this actually change anything?
The truth is, not as much as you’d think.
While a lower prime rate generally means lower interest rates for those with variable mortgages and lines of credit, lenders have already started shrinking the discounts they offer on variable rates.
Here’s what that means:
- Variable mortgages are based on the prime rate minus a discount (e.g., Prime - 1.0%).
- A month ago, lenders were offering a 1% discount off prime.
- Now, those discounts have shrunk to 0.7% or less, meaning the quarter-point rate cut doesn’t have as much impact as it might seem.
Should You Care About This Rate Cut?
This isn’t a game-changer, but it signals that more cuts may be on the way. If rates continue to drop later this year, affordability could improve—but buyer competition will likely heat up.
The best move? Speak with an expert. We work with trusted mortgage brokers who can help you understand your options, whether you're buying, refinancing, or just planning ahead.