![](https://www.ctvnews.ca/polopoly_fs/1.6976871.1721873052!/httpImage/image.jpg_gen/derivatives/landscape_800/image.jpg)
DEVELOPING Jasper updates: Wildfire reaches Fairmont Jasper Park Lodge
One of two wildfires threatening Jasper National Park has reached the townsite.
The Bank of Canada has lowered its key interest rate by a quarter of a percentage point to 4.75 per cent. Here's what it could mean for your finances.
What does it mean for consumers and prime rates?
The Bank of Canada's benchmark rate affects borrowing costs for banks, which means they're able, but not forced, to lower their own lending rates.
Banks are generally very quick to move their prime rate higher in tandem with Bank of Canada hikes. They've been less consistent on the way down. But when the central bank last lowered its rate four years ago, banks did follow suit within a day.
Canadian banks also have more flexibility in deciding to cut than they used to. Banks choose how much interest they add to the Bank of Canada rate, and that buffer has widened over the past couple of decades.
From the mid-1990s to 2008, the added margin averaged around 1.5 per cent. It rose to 1.75 per cent until around 2015, and since then has stood at around two per cent added to the bank rate.
What does it mean for my mortgage?
If banks move their prime rate down, it will have an immediate effect on borrowers with variable-rate mortgages, just as they've felt the brunt of rising rates.
Those with a fixed-rate mortgage will not see their payments change until it comes time to renew their loans.
Fixed-mortgage rates are determined by what happens to the bond market, which, while also affected by Bank of Canada rate decisions, is based on overall investor confidence. The market had already largely priced in the rate cut.
How much savings on a mortgage can be expected from the rate cut?
A quarter percentage point cut doesn't translate into a major change in monthly mortgage payments. Someone with a $600,000 mortgage, 25-year amortization and a six per cent interest rate would save about $88 a month if the rate was 5.75 per cent.
What does it mean for lines of credit and credit cards?
Lines of credit are generally tied to bank prime rates, so borrowers should see some savings if banks reduce their prime rates.
Credit card rates are more fixed, so consumers shouldn't expect much of a break there.
What does it mean for my savings account rate and Guaranteed Investment Certificates?
Savings accounts and GICs have seen higher returns as rates rose, and could see that reverse if prime rates go down in line with the Bank of Canada.
GIC rates have already started trending down in anticipation of rate cuts, though some smaller financial institutions have maintained higher rate offerings in an effort to lure customers.
How have interest rates affected your mortgage? We want to hear from you.
Share your story by emailing us at dotcom@bellmedia.ca with your name, general location and phone number in case we want to follow up. Your comments may be used in a CTVNews.ca story.
This report by The Canadian Press was first published June 5, 2024.
One of two wildfires threatening Jasper National Park has reached the townsite.
Alberta has called in the Canadian Armed Forces to help assist with the worsening wildfire situation in the province.
U.S. President Joe Biden on Wednesday delivered a solemn call to voters to defend the country's democracy as he laid out in an Oval Office address his decision to drop his bid for reelection and throw his support behind Vice President Kamala Harris.
Staff at a Barrie child care centre say they are frustrated by what they call a local MPP's inadequate response after a car crashed through a window in one of the toddler rooms.
The North American Aerospace Defence Command (Norad) intercepted two Russian and two Chinese bombers flying near Alaska Wednesday in what appears to be the first time the two countries have been intercepted while operating together.
An analyst and an assistant coach with Canada Soccer are being removed from the Canadian Olympic Team and 'sent home immediately,' according to the Canadian Olympic Committee.
After a handful of Australian water polo players tested positive for COVID-19 this week, questions have emerged around how the spread of the disease will be mitigated at the Summer Olympic Games in Paris.
A B.C. man who was hired to help a non-profit build a food hub but instead spent the money on personal expenses – including travel, restaurants, booze and cannabis – has been ordered to pay more than $120,000 in damages.
Two people are dead and two others suffered serious injuries following a shooting that police have described as a 'gun battle' outside a plaza in Scarborough, Ont. early Wednesday morning.
A local First Nations elder and veteran is helping to bring the Ojibwe language to a well-known film for the first time.
A cat who fled her Montreal home nearly a decade ago has been reunited with her family after being found in Ottawa.
A woman in Waterloo, Ont. is out thousands of dollars for a car crash she wasn’t involved in.
A swarm of bees living in a lamppost in Winnipeg’s Sage Creek neighbourhood has found a new home for its hive.
Around 100 acres of Manitoba Crown Land near the Saskatchewan border is being returned to the Métis community.
Nova Scotia is suspending the licensed Cape Breton moose hunt for three years due to what the province is calling a “significant drop” in the population.
A well-known childhood prank known as 'nicky nicky nine doors,' or 'ding dong ditch,' has escalated into a more serious game that could lead to charges for some Surrey, B.C. teens.
It's been more than a month since their good friend was seriously hurt in an accident and two teens from Riverview, N.B., are still having a hard time dealing with it.
Halifax bridges have collected thousands of coins from around the world.