A third cut — and what it is actually worth on a Toronto mortgage
Three consecutive cuts, and prime is down three quarters of a point from where it started the summer. In most of the country that is a modest improvement. In the GTA it is worth more in dollars than almost anywhere else, for the simple reason that the mortgages here are bigger.
A quarter-point move changes a payment by roughly $15 a month for every $100,000 borrowed on a 25-year amortization. Toronto's average sale price in August was $1,107,291. With 20% down that is a mortgage near $885,000 — so this one cut is about $130 a month, and the three together are close to $390. That is the thing to hold on to about rate news in this market: the same announcement that is background noise in a $350,000 market is a real line in a Toronto budget.
It cuts the other way too, which is why the qualifying conversation matters more here than the rate conversation. You are still stress-tested at the greater of your contract rate plus two points or 5.25%, and on a mortgage this size two extra points is an enormous amount of income. Rate cuts move the payment; they move what you qualify for much more slowly.
Locally, 4,996 homes sold in August against 25,612 active listings — about 3.4 months of supply, and a market where buyers had time to think. If you are shopping, that balance is worth more to you than the next quarter point, because what you negotiate on price is permanent and the rate is only fixed for a term.
What the Bank said
“The Bank of Canada today reduced its target for the overnight rate to 4.25%, with the Bank Rate at 4.5% and the deposit rate at 4.25%. The global economy expanded by about 2.5% in the second quarter, consistent with projections in the Bank’s July Monetary Policy Report (MPR).”
The rate path around this decision
For context, unemployment was running at about 6.5% and inflation at 1.6% around this decision.
Where this leaves you
Rate announcements make headlines; approvals turn on your own numbers. If you're buying, renewing or refinancing in Toronto, the useful next step is finding out what you actually qualify for — see current rates, run the math, or start an application. You can also follow the local market in our Toronto housing market reports.