Variable rate mortgages have been impacted by the two overnight rate cuts by the Bank of Canada so far this year. In total, the overnight rate has dropped by .50% (two cuts of .25%). The major banks have passed on some of those savings to customers by reducing the prime rate from 3.0% to 2.70% (two cuts of .15%). With prime at 2.70%, you can now obtain a 5 year variable rate mortgage for as low as 2.05% (a discount of .65% off prime). Of course this is subject to change since the rate will fluctuate with prime.
Experts expect that the prime rate will remain fairly low for at least the next year and maybe longer. This makes it a good time to be in a variable rate mortgage, if you are okay with the potential for a rate increase down the road.
If you have a variable rate mortgage, we suggest setting the payment as if you have a higher rate (ie. 3.50%). This will prepare you for potential future rate increases and also pay down your mortgage principal much faster.