Calgary homebuyers take advantage of interest rate cut

The Bank of Canada has lowered its key lending rate by a quarter of a percentage point to 2.5 per cent—the lowest it's been in two years.

The Bank of Canada (BOC) cut its key interest rate on Wednesday by a quarter basis point to 2.5 per cent.

“At this point, inflationary pressures look a little more contained, and against that background and the background of a weakening economy that will put additional downward pressure on inflation, that tipped the balance of risks in favour of cutting our policy rate today,” said Tiff Macklem, Bank of Canada governor.

Interest rates haven’t been this low since the summer of 2022.

They peaked at five per cent from July 2023 to June 2024.

The drop puts a focus on variable rates, which for some have dropped below fixed rates.

“The prime rate used by most Canadian lenders is going to drop to 4.7 per cent and if lenders choose to price in the full discount to their variable mortgage rates, we could see them going as low as 3.7 per cent. That will position them below the best five-year fixed rate, which is currently 3.94 per cent,” said Penelope Graham, Rate Hub mortgage expert.

It’s a welcome relief to Calgarian Zoë Decker, who just sold her Bowness home to upgrade to her dream house nearby.

“We knew that our mortgage rates would definitely go up because it’s a bit of an upgrade. So this interest drop has been definitely a bit of a lifesaver,” said Decker.

Her Realtor, Paul Ackerman, thinks the drop will most likely help first-time homebuyers.

“What we see typically when the rates change is a little bit more interest from buyers. It’s not massive, but it’s definitely tangible,” said Ackerman.

“I think for a buyer, when you’re considering purchasing, you’re looking at a number of different things, and the rates are obviously one of a number of components. When the rates change and the trajectory is good that we think that rates are going to continue to go downwards, then it makes a difference. It particularly makes a difference for first-time buyers.”

The Bank of Canada will make its next interest rate decision on Oct. 29.