Edmonton Mortgage Blog

Things are looking up!

October 24, 2024 | Posted by: Natalie Wellings

It was widely speculated and anticipated for weeks, and now it’s finally here! A gift from the Bank of Canada in the form of a 50-basis point cut! The central bank cut its rate yesterday by 0.50%. This is welcome news for those with variable rate mortgages and home equity lines of credit. The prime rate moves from 6.45% to 5.95%. I’m happy with any cut they’ll give us, but as you can see, the prime rate still remains quite high, and those with variable rates are still feeling the pinch.

In fixed rate news, rates are already substantially lower than on variable rate mortgages, with the 5-year fixed rate hovering around 4.5%. So, that being said, why would anyone choose a variable rate over a fixed rate and pay more? In short, flexibility and the hope of an even lower prime rate in the future.

I’m definitely seeing a marked increase in the number of borrowers choosing variable rate mortgages over fixed ones, including myself with my recently renewed mortgage.

It will be interesting to see what happens between now and the end of the year. The Bank of Canada has one more scheduled rate announcement set for December 11th, 2024. Hopefully another cut is in the cards.

Fixed rates do not change on a schedule; they are priced based on bond yields and can change at any time. I’m hoping for more rate decreases on the fixed side as well.
It’s nice to have lots of positive news to share with you after several years of high interest rates. In addition, there are several positive changes that will make mortgage financing easier. Here’s a recap of the changes effective December 15th, 2024:

• Stress Test Removal: The stress test is being removed on mortgage renewals, allowing borrowers to qualify to move their mortgage between institutions more easily.
• New Construction Homes: The maximum amortization has been increased to 30 years for mortgages on new construction homes.
• Amortization Changes for First-Time Buyers: First-time buyers can amortize their mortgage over 30 years instead of 25 years (starting December 2024). A first-time buyer is someone who has never owned a home or has not owned one in the last four years, including those going through a separation or divorce. Please contact me to ensure you meet this definition.
• Lower Down Payments on Homes Over $1 Million: The maximum purchase price allowable on an insured mortgage has increased from $1 million to $1.5 million—this means homes under $1.5 million can be purchased with less than 20% down.

I’m always here for you if you want to chat; please reach out! The next rate announcement is scheduled for December 11th, 2024. Another rate cut is anticipated. Note: this will announce any changes to the prime lending rate which affects variable-rate mortgages (not fixed ones).

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