Bank Rate Cuts

 

REALTORS® welcome bank rate cut 

Change will help home ownership 


 

OTTAWA – March 4th, 2008 – The interest rate cut announced today by the Bank of 

Canada will help Canadian home owners and buyers, according to The Canadian 

Real Estate Association. 


 

The Bank of Canada cut its benchmark overnight lending rate by one-half of one 

percentage point to 3 1/2 per cent on March 4th, and signaled further cuts in the near 

future. The trend-setting Bank rate, which is set 0.25 percentage points above the 

overnight lending rate, now stands at 3.75 per cent. 


 

“The threat of inflation is being eclipsed by concerns about slower economic growth, 

so the Bank of Canada cut its trend-setting bank rate to boost growth,” said CREA 

Chief Economist Gregory Klump. “Financial market turmoil will remain a downside 

risk to growth for some time. This means the Bank will probably continue lowering 

interest rates.” 


 

Lower lending rates will help offset the effect of tightening credit conditions and allow 

homeowners to obtain better mortgage terms. This will also benefit Canadian 

homeowners dealing with variable rate mortgages. 


 

“The Bank of Canada today acknowledged that the U.S. economic slowdown was 

likely to be deeper and more prolonged than it projected less than six weeks ago,” 

said CREA President Ann Bosley. “When the Bank decided to lower interest rates 

today, the advertised five-year conventional mortgage rate stood at 7.29 per cent. 

This is less than one per cent above where it stood at the beginning of last year. 

Competition among mortgage lenders remains stiff, which continues to help many 

borrowers negotiate discounts from advertised rates.“ 


 

Declining interest rates and a rebound in economic growth are factored into the 

CREA MLS® 2008 market forecast. “MLS® sales activity will stay strong and reach 

the second highest level on record this year. Residential MLS® prices are also 

expected to continue rising. Additional cuts to mortgage interest rates are good news 

for housing affordability and Canadian housing demand,” Klump added.