As you may know, the Bank of Canada lowered its overnight interest rate to 4.25% in September. What this means is that British Columbians will see reduced interest rates on variable mortgages, car loans and on their credit cards. This was welcome news for Canadians and reflected our plan to responsibly create the economic conditions for interest rates to come down.
While the Conservatives have focused their communications on simple slogans that are designed to misinform you, I’m here to share the facts.
Canada was the first G7 country to cut interest rates in June and is the first G7 country to cut interest rates twice. This interest rate cut also follows the rate of inflation falling to 2% from its peak of 8.1% in June 2022. This marks the eighth straight month that inflation has remained below 3% and shows that our government’s work to stick to responsible fiscal targets is working.
The Bank of Canada is also forecasting that as borrowing costs ease, GDP growth in Canada will increase in the second half of 2024 and through 2025.
What does this mean for British Columbians?
Well, for starters, British Columbians with variable-rate mortgages will see an immediate reduction in their next payment. This rate cut is also a sign of relief for homeowners who are coming up on their mortgage renewals, as this is an indication that lower interest rates are on the way. For buyers that are looking to purchase their first home, this is a positive sign that they will be able to qualify for a larger amount.
On the topic of mortgages, this month your Liberal government announced the boldest mortgage reforms in decades. We increased the price cap for insured mortgages from $1 million to $1.5 million to keep in line with the rising house prices. Mortgage insurance allows you to qualify for a mortgage with a down payment of less than 20%, enabling people to buy homes in pricier areas such as Vancouver, Toronto, and others. I can’t talk about mortgages without mentioning our work on helping Canadians shop for the best mortgage, we’ve made it easier for you to switch lenders so that you can find the most affordable rate. Previously, Canadians would have to undergo a mortgage stress test when switching providers. Now, you’re free to switch to the best and lowest interest rates.
You may have heard that we expanded eligibility for 30-year mortgage amortizations to all first-time homebuyers and to buyers of new build homes. This will reduce the cost of your monthly mortgage payments and help you buy the best home for you and your family. To ensure that the banks are well-equipped to support you, we’re providing them with the technical advice needed to offer first time buyers mortgages with lower monthly payments. Now, you can start talking to your bank to get your first mortgage application ready for December 15th, which is when these changes will be implemented. If you’re a renter, we also introduced something for you with the newly released blueprints for the Renters’ Bill of Rights, which are designed to protect renters such as yourself while you save for a down payment.
With the easing of inflationary pressures, borrowing costs, and broad price pressures, our economy is showing signs of strengthening as we prepare for the future. With that said, we understand that these numbers do not immediately ease the economic anxiety many British Columbians face. This is why our entire team remains focused on tackling rising grocery costs, addressing housing affordability, and improving the lives of all Canadians.
