Prime rate dropping to 4.75%?

The Bank of Canada is widely expected to cut rates by 50bps on Tuesday to 3.00 percent, the lowest target rate since October 2005. Canada's annual inflation rate last month was the slowest since January 2007, as prices for automobiles dropped, giving the central bank room to lower interest rates for a fourth straight meeting next week. Total inflation in March compared with a year ago was 1.4 per cent - the slowest pace in well over a year, and the fourth successive month of deceleration, according to figures released yesterday by Statistics Canada.

If the Bank Of Canada cuts interest rates by 0.50%, prime mortgage lending rate will drop to 4.75%. People with variable rate mortgages (especially those who have deals like prime minus 0.80%) are going to enjoy some savings on their mortgage payments. Housing market will gain some strength as more buyers will be tempted to act now and take advantage of these low rates.

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