Variable rate mortgage holders are the big winners from the Big Six banks’ moves to match the Bank of Canada’s 50 point reduction to its trendsetting interest rate.

According to rate comparison website RateSpy.com, variable rate customers will see rates drop by half a per cent for interest cost savings of roughly $500 per year for every $100,000 of mortgage.

Those with adjustable-rate mortgages will see monthly payments fall by about $24 per $100,000, while variable-rate customers will continue to make the same monthly payment but their portion directed to principal will rise while the amount paid in interest will fall. Home backed and regular lines of credit will drop as well.

All of this follows the Bank of Canada’s decision Wednesday to lower its overnight target rate by 50 basis points to 1.25 per cent — the lowest since the 2008 recession — due to fears of a deepening economic downturn caused by the coronavirus and after the U.S. Fed imposed an emergency 50-basis-point cut.

There had been expectations that the banks would not pass on the full BoC cut, but Canada’s largest bank, RBC, led the way Wednesday evening, announcing a 50-basis point reduction to 3.45 per cent for its prime rate effective Thursday, which is used to set the rate at which banks lend to customers with good credit.

The other big banks — Bank of Nova Scotia, TD-Canada Trust, CIBC and BMO followed suit with National Bank of Canada confirming Thursday that it will also lower its prime rate by 50 points to 3.45 per cent as of Friday.

Rob McLister, RateSpy.com’s founder, said the the lowest widely available variable rate will drop immediately to roughly 2.34 per cent from 2.84 per cent, while the 2.59 per cent rate for the lowest conventional five year fixed-rate mortgages will fall in the short term due the lower prime and downward movement in bond yields which normally signal falling mortgage rates. He said fixed rates will trend lower as economic data continues to soften, “but we’ll have to wait and see by how much.”

Many observers expect the Bank of Canada to announce another 25 point rate cut next month — possibly another quarter-point cut before the end of the year, which would bring Canada’s overnight rate to 0.75 per cent.

“The growing risk of COVID-19 to the outlook suggests that the Bank of Canada will follow today’s 50-bp cut in interest rates with an additional 25-bps cut in April,” said Stephen Brown of Capital Economics in a note. “Given lingering concerns that looser policy will boost an already red-hot housing market, however, we think the Bank is unlikely to go further than that.”