Edmonton homeowners are saving hundreds monthly with rate cuts

A new real estate report calculated how much money homeowners can save now that interest rates have dropped, and while Edmonton’s housing market remains comparatively affordable, lower borrowing costs could lead to a rise in demand.

According to Zoocasa, Canada is in its fourth phase of pandemic rate policy. The real estate site writes that phase one involved aggressively dropping rates, phase two involved dramatically increasing them to fight inflation, and phase three involved keeping rates elevated to tamp down inflation.

We are moving into phase four, which is a less restrictive rate policy. Last week, the Bank of Canada lowered its key interest rate to 4.75%, the first rate cut in over four years.

Since changing interest rates immediately impacts variable-rate mortgages, Zoocasa has calculated the average monthly mortgage payment on a five-year variable following the rate cut.

With the recent 0.25% rate cut, Edmontonians will, on average, save $203 monthly on mortgage costs.

Zoocasa

While the savings are certainly welcome news for homeowners, lower borrowing costs could once again heat up Canada’s housing market. Zoocasa writes that the real estate market is poised to see “significant changes” if lending rates continue to drop.

“With lower lending rates, prospective buyers will be motivated to get off the sidelines, ultimately leading to more sales activity and the potential for an increase in prices,” explains Zoocasa CEO Carrie Lysenko.

“Now is an excellent time to get off the sidelines before the competition gets too fierce, explore your options and take advantage of the greater negotiating power you have with the current surge in inventory.”

The Bank of Canada’s next announcement is scheduled for July 24, 2024.

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