A man from Ontario says he is still considering selling his home, despite the interest rate cuts this week, with his mortgage payments expected to jump to over $2000 next month.

“I’m happy to finally see a rate cut,” said Jerry Best, a 66-year-old homeowner in Kitchener, Ontario. “I just wish it had come a lot sooner.”

The Bank of Canada cut its overnight interest rate by 25 basis points last Wednesday – a move not seen since before the pandemic.

At the same time, the central bank raised the possibility of further cuts in the future, with many economists expecting Canada to see additional reductions of 2 to 3 basis points by the end of 2024.

But for Best, it won't be enough to make a difference before he renews his mortgage on July 17 – just one week before the next interest rate announcement.

The Bank of Canada had previously raised interest rates 10 times starting in March 2022 as part of a tightening campaign made necessary by rising inflation.

Best said, “Before the Bank of Canada raised interest rates, I fell into the nightmare of variable rates, which just continued to go up and up.”

To stay afloat, Best turned to a private lender and now pays $3660 per month. But by July, his payments are expected to balloon to around $6000 to $6500.

To cope with what’s to come, Best plans to list his home for sale by the end of the month and move west to Woodstock, Ontario.

For Fabian Wells, renewing his mortgage feels like an hourglass dripping the last grains of sand. Soon, his time will come, and the 50-year-old homeowner will feel like a first-time buyer again.

“Although things are moving in the right direction, I still feel a bit anxious about what to do – should I do it for the long term? Should I do a shorter term since it will continue to decline? Or will it change and come back again?” he said.

Five years ago, the long-term Markham resident moved to Kleinburg in Vaughan, Ontario. His daughters were returning home from university, and the move north created more space for the family. In Kleinburg, Wells fell in love with the access to nature, walking trails, and community.

While Wednesday’s announcement was a slight relief, he is already looking forward to the next announcement on July 24, before his mortgage payments increase by $2000 by the end of that month.

Not wanting to uproot his family from their newly stabilized neighborhood, they will need to cut back on spending – temporarily halting extended family birthday celebrations, going on vacations, and dining out.

“Having that potential barrier over your head is scary, to say the least.”

Douglas Howes, a personal finance expert in Kitchener, said that for Wells and Canadians alike, a quarter-point cut realistically won’t make a big difference in the short term.

“What really matters is what happens next,” he said. “Is this the first of many cuts? That’s what most people are expecting. If so, it would bring some relief to borrowers in the coming months.”

Historically looking at interest rate cycles, Ron Butler, a mortgage broker in Toronto, noted that there has never been a quarter-percent cut followed by a complete halt for a year.

Butler said, “This has literally never happened in the history of interest rates.”

However, Howes suggests the safest route is to look at your personal finances and make decisions based on what you can afford.

“What can you afford to pay? Don’t go $1 over that. That way you don’t have to worry about what happens in the future regarding interest rates.”