Bank of Canada cut will prompt lower variable mortgage rate costs: Ratehub

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Canadian homeowners with variable mortgage rates can expect lower monthly payments following the Bank of Canada's recent interest rate cut.  The central bank lowered its key interest rate target for the sixth consecutive time, bringing it down to three percent.  

This prompted major banks to decrease their prime rates, which directly impacts variable mortgage rates.  Experts predict this will lead to lower payments for existing variable-rate mortgage holders and slightly lower fixed rates as well.   

Calculations show significant potential savings for homeowners.  For example, someone with a variable rate mortgage could see their monthly payments decrease by roughly $87 on an average-priced home.  Over a year, these savings can add up to over $1,000.  The exact amount varies depending on the mortgage amount and rate, but experts estimate a decrease of about $15 per month for every $100,000 borrowed, for each quarter-percentage-point rate cut.   

This rate decrease comes at a time of economic uncertainty, but also offers potential support for the housing market. While the market isn't seeing a dramatic surge, the lower rates give buyers more time to find the right home and make informed decisions.  Since borrowing costs peaked last year, homeowners with variable rates have already seen substantial reductions in their monthly payments, making homeownership more affordable.