Jumbo rate cuts are back! The Bank of Canada announced a significant 0.50% rate cut earlier this morning, departing from its usual 0.25% adjustments. This move was prompted by a weaker-than-expected economy and lower inflation, with September’s CPI data showing a headline inflation rate of just 1.6%. For Governor Tiff Macklem, this marked a turning point, prompting him to set aside the more conservative 0.25% cut and opt for the "big guns."

A noteworthy historical fact: In every Bank of Canada rate-cutting cycle since August 2001, when a 0.50% cut has first been introduced, it has always been followed by an additional cut of at least 0.50%. If history is any guide, we may be in store for another significant reduction before the New Year.

Today’s rate cut brings the Bank of Canada’s 2024 total to 1.25%, and more action could be on the horizon with the final interest rate meeting of the year scheduled for Wednesday, December 11th. The prime rate now sits at 5.95%, with most variable-rate mortgage holders experiencing rates between 4.9% and 5.5%, depending on their discount to prime.

What else does this mean for you?:

• Pre-approvals: If you currently have a pre-approval in place and were considering a variable rate mortgage, today’s rate cut increases your maximum purchase price. For an updated maximum, contact your Better Mortgage Select Agent or Underwriter, or email us at info@bmselect.ca

• Fixed rates: While the variable rates have shifted, fixed rates are expected to remain steady for now, as today’s cut was already priced into the market.