The Federal Reserve has cut interest rates significantly, causing Canadian loan rates to fall below 4%! Homebuyers have a great opportunity!

The Federal Reserve lowered interest rates by 50 basis points on Wednesday, which will have a chain reaction on Canada. Experts point out that both the Bank of Canada and Canadian mortgage holders will be affected. The first lending institution in Canada has started offering a 5-year fixed loan interest rate of 3.99%.

The Federal Reserve has cut interest rates for the first time in four years, an extraordinary magnitude that surprised many economists who had originally expected a rate cut of the standard quarter of a percentage point.

The Bank of Canada has entered a loose cycle and has lowered policy rates three times since June, each time by 25 basis points.

But Nathan Janzen, Assistant Chief Economist at Royal Bank of Canada, said that the Fed's measures will also have an impact on the Canadian bond market, which is an important indicator of Canadian mortgage rates.

Bond yields are influenced by the expected policy interest rates of the US and Canadian central banks. These interest rates are also the benchmark for the main loan interest rates of Canadian banks, for example, the five-year Canadian government bond yield is closely related to the borrower's five-year fixed mortgage interest rate.

Janzen said that changes in US bond yields have an impact on Canada.

He explained that due to the close economic ties between Canada and the United States, significant changes in the southern border may affect the financial markets in the north. This includes bond yields that seem to move in a coordinated manner.

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He said: This to some extent reflects the close relationship between our economy in history, and the response of monetary policy is also the same.

Canadian mortgage interest rates below 4%

As the Bank of Canada sets a course for interest rate cuts, the overall yield of five-year Canadian government bonds has shown a downward trend, and while the Federal Reserve cut interest rates by half a percentage point on Wednesday, the yield also dropped by nearly 50 basis points.

Mortgage market observers say they have seen the impact.

The comparison website Ratehub announced shortly after the Federal Reserve's decision on Wednesday that its internal lending institution CanWise has released a 5-year fixed rate mortgage with an interest rate of 3.99%. This interest rate applies to homebuyers or loan renewals with "high ratio" mortgages, which means their down payment does not exceed 20%, the purchase price of the property is below 1 million yuan, and of course, there are other conditions.