December 11, 2024 Bank of Canada Rate Announcement

On December 11, 2024, the Bank of Canada cut its key interest rate again by 0.5%, making it 3.25%. This change reduces the prime lending rate to 5.45% and affects variable rates and variable-rate mortgages only. Fixed-rate mortgages remain unaffected.

This marks the fifth consecutive rate cut since June, driven by a 1% growth in the Canadian economy during Q3—below the Bank’s October forecast—with even weaker growth expected in Q4.

In their press release, the Bank stated:

“A number of policy measures have been announced that will affect the outlook for near-term growth and inflation in Canada. Reductions in targeted immigration levels suggest GDP growth next year will be below the Bank’s October forecast. The effects on inflation will likely be more muted, given that lower immigration dampens both demand and supply. Other federal and provincial policies—including a temporary suspension of the GST on some consumer products, one-time payments to individuals, and changes to mortgage rules—will affect the dynamics of demand and inflation.”

Key Mortgage Rule Changes

New mortgage rules coming into effect on December 15, 2024, include:

• A $1.5M price cap for insured mortgages.
• 30-year amortization options for first-time homebuyers.
• 30-year amortization options for all new home builds.

These changes are expected to stimulate market activity. If you’d like to explore how the new rules impact your buying power, call me to discuss your options. The next Bank of Canada rate announcement is scheduled for Wednesday, January 29, 2025.

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