Steinbach Credit Union has lowered its interest rates.

Chief Executive Officer Glenn Friesen says they typically follow the lead of the Bank of Canada. When the Bank of Canada announced Wednesday morning that it cut its key interest rate by a quarter point to 4.75 per cent, SCU followed suit. 

"It's starting to be good news for borrowers," says Friesen. "We're moving in the right direction."

Friesen says this is the first time that the interest rate has dropped since the pandemic. He suggests the last drop was probably in 2021, when the rate dipped to a quarter of one per cent, its lowest mark ever. 

There was speculation that the move might come this week. Friesen says he felt there was a 50/50 chance. He notes the Bank of Canada always said that once the inflation rate gets back into the one to three per cent, it would consider lowering the interest rate. Friesen says clearly the Bank of Canada believes that the economy has slowed enough, and that inflation has dropped enough to begin the lowering process. 

"They have said that they won't go down as fast as they went up," he points out. "But hopefully we can continue to see a downward rate so our borrowers can have a better chance of paying off their debt."

Friesen says Steinbach Credit Union's prime rate has dropped to 6.95 per cent. Their variable savings rate now starts at 3.55 per cent. 

For those paying off a mortgage with a variable rate, Friesen says this week's adjustment certainly does not translate into huge savings, but it is something. He notes someone with a $100,000 mortgage will see a savings of $250 per year or about $20.83 per month. And someone with a $400,000 mortgage will notice a savings of $1,000 per year. 

"I'm glad they did it," says Friesen, referring to this week's decision by the Bank of Canada. 

Friesen says he is hopeful that there might be at least two more rate reductions this year. 

"I think that would get us on a track to where I think that they want to drop it somewhere in the 200 basis points over the next two to three years," notes Friesen.