The Bank of Canada has cut it’s key overnight lending rate 0.75% down to 1.5% which puts its lending rate to 1.75%. What does this mean for current and prospective home owners? Hopefully the big banks will also cut their rates down as well. Reuters is already reporting that CIBC and TD have dropped their prime rate down to 3.5%!
Wow. That is cheap money. Good if you are leveraging. Bad if you are saving (unless you have that money in GICs with your rate already locked in). That means that one of my past clients is now paying an astonishing (in Canada, at least) 2.6% interest or just under $400 per $100,000 borrowed.
If you are in a fixed interest rate on your mortgage it is very much definitely time to talk about paying out a penalty and getting int a variable.
Mortgage rates are also dropping according to one of my brokers with Prime+0.6% now available so the best rate on a variable today is around 4.1%. That is a big difference from the 5.25% that was around a couple of months ago.
Vancouver, BC 
I like to think that my savings account with my downpayment in it is leveraging… at the rate of about $10k per month! A tiny interest rate on savings is surely better than a negative rate on real estate…
The Bank of Canada are following on with the rest of the world. They are using interest rates on a macro economic level to try and get us out of the crisis we all face. Its bad news for savings accounts but a great time for people with mortgages.