Posthaste: How much are variable-rate mortgage holders saving after the rate cut?
For those with a variable rate mortgage, last week’s Bank of Canada interest rate cut was welcome relief, but how much Canadians ultimately saved really depends on where they live.
A new report from the real estate website Zoocasa found the average monthly savings for someone with a five-year variable rate mortgage is $155 per month in Toronto and $166.20 in Vancouver.
The average yearly savings in Toronto and Vancouver amounts to $1,860 and $1,994, respectively.
On the other end, monthly savings amount to just $76.60 for the average mortgage holder in Regina, the most affordable city Zoocasa included in the report.
While the savings might not seem like much in some regions, economists are expecting between two and three more cuts by the end of 2024, which could begin as soon as the next interest rate decision in July.
“A perceived dovish tone suggests the likelihood of a greater number of follow-up moves,” Andrew Grantham, senior economist at CIBC, said in a note last week.
“We continue to forecast a further 25 (basis point) reduction at the next meeting in July, and a total of four cuts (three more after today’s) by the end of the year.”
James Laird, co-chief executive of Ratehub.ca and president of CanWise mortgage lender, agreed that more cuts are likely incoming.
“Usually if there’s one rate cut, more will follow,” Laird said in the Zoocasa report. “Now, Canadians will be wondering where the Bank wants to get to and when, which will be exciting if you are a borrower.”
If Canada does cut three more times by the end of the year, Canadian variable mortgage rate holders could see monthly savings of more than $500 in some of Canada’s most expensive cities.
The mortgage relief is also expected to open the door for more
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