Mandeep  Toor

Mandeep Toor

Broker of Record

OMAXE REAL ESTATE INC. BROKERAGE

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How much savings on a mortgage can be expected from the rate cut?

A quarter-percentage-point cut doesn’t translate into a major change in monthly mortgage payments. Someone with a $600,000 mortgage, 25-year amortization and a six per cent interest rate would save about $88 a month if the rate was 5.75 per cent.

Bank of Canada governor Tiff Macklem did say it’s “reasonable” to expect further cuts, but that the central bank is making its interest rate decisions one at a time.

Toronto-Dominion Bank is predicting the central bank will cut rates two more times by the end of the year to bring the benchmark to 4.25 per cent, while Canadian Imperial Bank of Commerce and Royal Bank of Canada are predicting three more cuts, which would bring the key rate to an even four per cent. A full percentage point off the $600,000 mortgage would translate into about $349 a month in savings.

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