When the key interest rate falls by 0.25%, it has several impacts on the economy.

What happened after the 2nd rate drop?

A decrease in the key interest rate usually leads to lower mortgage rates, making it cheaper to borrow for homebuyers. This can stimulate demand in the housing market, potentially increasing home sales and property prices.

Interest on other types of loans, such as personal loans, car loans, and lines of credit, also tends to drop, which encourages consumer spending.

Lower mortgage rates reduce monthly mortgage payments, which may encourage more people to enter the housing market. This can be particularly impactful in expensive cities like Toronto and Vancouver, where housing affordability is a major concern​.

Homeowners may take the opportunity to refinance their existing mortgages at lower rates, reducing their overall interest costs and freeing up disposable income.

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