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By Michael Reeve

KEY INTEREST RATE

Interest rate cut provides small impact on mortgage payments: Kamloops broker

Jun 5, 2024 | 5:30 PM

KAMLOOPS — With the central bank’s key rate dropping by 25 basis points on Wednesday (June 5), the trickle down impact to those currently paying down a mortgage will be limited.

While the interest rate drop may inspire more people to enter the real estate market, those already in will be happy to hear about the cut. But for homeowners with variable rate mortgages, the difference will likely be small.

“When you take a look at anybody who is in a variable rate or adjustable rate mortgage, $100,000 of mortgage value is $14 per month — so not a whole lot of savings on a month-to-month basis,” said mortgage broker Tara Sales. “If you have variable, like a (home equity line of credit), it’s $21 per month savings. With all those increases we’ve had over the last 27 months, it’s not really going to be spurring people on to go start spending money.”

The good news for mortgage holders is that the central bank is moving the interest rate back toward the target of 2.75 per cent. But even as the rate begins to trend down, it will still be individual situations that will best judge what mortgage type will be best for Kamloops residents.

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“Variable or fixed is dependent on the person and the situation. If you are a family of five with a limited budget, variable may not be the option for you. If you are a couple who don’t have any children, lots of movement in your budget, variable could definitely be a option for you. It’s all based on what your income is, what your risk tolerance is.”