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Canadian real estate buyers seeking relief from recent rate cuts may be disappointed, as the Bank of Canada's overnight rate reduction primarily affects variable-rate mortgages and HELOCs. Fixed-rate mortgages, which are more popular among buyers, did not see a reduction, as these loans have already factored in future rate cuts. Additionally, the 5-year fixed mortgage rate, which influences many borrowers, actually increased slightly due to higher inflation expectations.

The Bank of Canada's overnight rate impacts short-term borrowing costs, benefiting borrowers with variable-rate loans like HELOCs and variable mortgages. However, fixed-rate mortgages are linked to government bond yields and are not as affected by the BoC's actions. The 5-year fixed-rate mortgage, which is most commonly chosen, remains influenced by the 5-year GoC bond yield and inflation expectations.

While the recent rate cut provided some relief for variable-rate borrowers, it did not significantly affect fixed-rate options, which have already priced in anticipated rate cuts. BMO forecasts that the low for mortgage rates in a stable economy may already be reached, with rates likely stabilizing around 4%. This could make housing more affordable for some buyers, though the rates are still high enough to dampen investor enthusiasm and prevent an overheated housing market.

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