MOOSE JAW — As predicted by Conexus Credit Union mortgage specialist Janelle Bookout, the Bank of Canada announced a quarter percent reduction to the prime interest rate on the morning of Sept. 4. The rate is now 6.45 per cent, down from 6.7 per cent prior to the announcement.
Homeowner impact
For homeowners, the announcement means anyone with variable mortgage rates will see a reduced interest charge as interest is determined in part by the prime rate.
Homeowners who opted for a fixed-rate mortgage — which Bookout said entails most of her clients — won’t see the direct impact of the announcement aside from personal loans.
Anyone with a personal floating interest rate loan — such as consolidated loans or a consumer loan that includes car loans — and home or unsecured personal lines of credit will now see slightly lower interest charges as well.
Determining prime
Tiff Macklem, governor of the Bank of Canada, announces the central bank’s new policies including any changes to the prime lending rate.
“Something he (Macklem) delivered was (that) inflation has softened,” Bookout said. “So, they’re happy with our inflation numbers and where they’re trending.”
Some economists were hoping for a prime reduction by as much as half or even three quarters of a per cent on Sept. 4. This optimism, Bookout said, wasn’t shared by the bank.
“The Bank of Canada is… erring on the side of caution, and they’re really focusing on the data that’s coming in,” she explained. “They do that to ensure that we don’t find ourselves in another difficult time.”
Deciphering the central bank’s next announcement is a difficult task, largely because the Bank of Canada is privy to a wide range of information — some of which is exclusively provided by the government.
Whether the prime rate will continue to decrease this year is hopeful but uncertain, Bookout said. In its analysis, the central bank looks primarily at core inflation — and that rate is coming down in the real estate sector.
Balancing this, however, is the shelter price inflation rate which remains high and is the biggest contributor to total inflation.
Either way, the Bank of Canada makes predictions based on behaviours it sees today and in a global economy, events that happen anywhere in the world can suddenly impact the local economy. The central bank’s next decision will also be determined from statistics which won’t be available until the end of September.
Anticipated growth
“Moose Jaw is known, I’ll say maybe provincially and in some cases… federally, as being an affordable place to live,” Bookout said. “It’s also known as being a hotbed for the rental market.”
In August, the average home price in Moose Jaw was $252,200, which compares to the benchmark price of $319,700 in neighbouring Regina.
Some factors that attract new residents and investors to Moose Jaw include the Sask. Polytech campus, a strong tourism sector, an easy commute to nearby centres including Regina, and plenty of opportunities for anybody looking to invest in the rental market.
“This is just a forecast again, but Saskatchewan is set to see some of the largest population growth across Canada between 2025 and 2027,” she said. This prediction is backed by Saskatchewan’s GDP which grew by three per cent to $80.3 billion in 2Q 2024 in a continued upward trend.
Saskatchewan has the highest individual annual income at $88,424 as of 2023. Much of this, Bookout explained, can be attributed to the province’s natural resource industry.
As of 2023, the average rent in Saskatchewan was $1,507 per month with an average home value of $286,000. The cost of living was $1,097 per person per month gross.
So far, Bookout has observed a sizable trend of residents relocating from out of province with typical origins in B.C. and Ontario.
By comparison, the average rent over the same period was $2,034 in B.C. and $1,877 in Ontario. Average home prices were $913,471 and $887,290, respectively. The cost of living in these regions was $3,445 per month in Vancouver, B.C. and between $2,822 per month in Ottawa and $3,551 per month in Toronto, Ontario. The average income was $66,232 in B.C. and $63,369 in Ontario.
“When there was more of the frenzy around inflation being high, I think it just made people think about their financial future, and some people decided to make the decision to sell their home in markets where the cost of living was more expensive, and just move to a market where they can afford to live,” she explained.
To speak with a financial advisor to learn about options you may not be aware of, simply contact your bank or credit union and request an appointment. To speak with Janelle Bookout at the Conexus Credit Union, visit Conexus.ca/Janelle-Bookout.
The Conexus Credit Union is located at 80 High Street West and can be reached at 306-690-1449.
The next Bank of Canada prime rate announcements are scheduled for Wednesday, Oct. 23 and Wednesday, Dec. 11. All central bank announcements take place at 8:45 a.m. CT.
