Better mortgage rates but not prices for B.C. homeowners, buyers after BoC rate cut

British Columbians can expect better mortgage rates after the Bank of Canada cut its key interest rate again Wednesday, experts said. Affordability, however, is still an issue.

Whether you have a variable rate mortgage or are looking to buy your first home, British Columbians can expect a bit of a break in the cost of borrowing after the Bank of Canada lowered its key interest rate by 25 basis points on Wednesday.

But it may not make homes any more affordable.

The third consecutive rate cut was widely expected by economists and brings the central bank’s benchmark interest rate to 4.25 per cent.

“We are going to start to see affordability conditions materially improve. However, it remains to be seen if it’s going to happen now or if they’re still awaiting further rate cuts,” hubrate.ca mortgage expert Penelope Graham said.

“If you’re a home buyer, you might really be questioning your timing if you have the luxury of waiting it out. And so we might still see people sticking to the sidelines. But I do think that we’re in store for a busier fall than certainly the spring and the summer.”

Graham expects lenders to lower their prime rates to 6.45 per cent, and the lowest five-year variable mortgage rates to fall to around 5.3 per cent.

Homeowners with a variable rate mortgage can expect their next payment to be a little lower, while those with a fixed payment schedule will see more of their payment go towards their principle, instead of interest.

Anyone shopping for a fixed rate mortgage may also be in luck, Graham says, as those rates are strongly influenced by the bond market, and bond yields have been dropping since Wednesday morning’s announcement.