Published October 23, 2024 • 4 Min Read
TLDR
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On October 23rd, the Bank of Canada announced a 0.5% drop in its policy interest rate, reducing it to 3.75%.
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The cut is the fourth straight decrease in a row, and the largest single rate drop since March 2020.
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Your financial situation is unique, and mortgage decisions should be made with this in mind – what’s right for your neighbour may not be right for you.
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There are many ways to access the advice and information you need to take charge of your mortgage.
During stable periods, interest rates rarely enter everyday conversation. When rates are low and consistent, Bank of Canada announcements don’t tend to spark much discussion. However, in times of flux, interest rate chatter grows louder. People start asking questions such as: Where are rates headed? How will rate changes affect my mortgage? I’m renewing my mortgage soon, what should I do?
Following the Bank of Canada’s latest interest rate announcement, these questions are sure to surface once again. After all, a 50-bps interest rate drop is the biggest single decrease we’ve seen since 2020 and will create significant buzz in the news.
The thing is, times of change often bring new opportunities, and the shifting interest rate environment is no exception. As rates have started to come down, there are opportunities for homebuyers and existing homeowners alike. But how should you respond? While interest rates may be a hot topic at dinner parties, here’s some real food for thought.
A potential sweet spot for first time homebuyers
The interest rate adjustments of the last six months have sparked movement in the real estate market. As rates have come down, inventory has opened up. Reports have shown sales volumes increasing through September as buyers and sellers – who had been previously sitting firmly on the sidelines – are starting to re-engage.
But activity is still relatively muted as hesitancy remains the dominant mindset. What does this mean for buyers who are ready to take action? While house prices in Canada came down when rates went up, in many markets, they haven’t climbed back to pandemic-era levels. This dynamic provides some opportunity for those who are prepared to make a move.
A sigh of relief for renewers
2024 has been a big year for mortgage renewals in Canada and many mortgage holders have been anxious about renewing at a rate considerably higher than what they may have secured three to five years ago.
If you’re getting ready to renew your mortgage in the coming months, the past year’s rate changes should offer some relief. And if rates keep decreasing, variable rate mortgage holders could continue to benefit, regardless of whether their mortgage is up for renewal or not. Take a look at our July 2024 article to understand the impact of lower interest rates on variable rate mortgages.
How to take charge of your mortgage
Whether you’re thinking of buying a home or ready to renew your mortgage, homeownership decisions are deeply personal. What works for your neighbour, sister or boss may not work for you.
Here’s how to take your mortgage into your own hands:
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See how rate changes may affect your mortgage payment. Use the RBC Mortgage Payment Calculator to understand how different mortgage rates, terms and types can affect your regular payment.
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Read the common questions asked by Canadians in today’s interest rate environment, and the answers we offer.
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If you’re renewing an RBC mortgage, you can use our Mortgage Renewal Tool (within our online banking) to explore your options, view available rates, and renew online in minutes. You can also book an appointment to go over your renewal in-person or over the phone.
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Talk to someone. Consider speaking with an advisor who can explain the current interest rate environment and provide advice that is specific to your individual situation. An RBC Mortgage Specialist or financial advisor can have a conversation with you about your complete financial position and how your mortgage fits into it.
The next interest rate announcement is scheduled for December 11, the last of 2024.
This article is intended as general information only and is not to be relied upon as constituting legal, financial or other professional advice. A professional advisor should be consulted regarding your specific situation. Information presented is believed to be factual and up-to-date but we do not guarantee its accuracy and it should not be regarded as a complete analysis of the subjects discussed. All expressions of opinion reflect the judgment of the authors as of the date of publication and are subject to change. No endorsement of any third parties or their advice, opinions, information, products or services is expressly given or implied by Royal Bank of Canada or any of its affiliates.
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