Canadian Mortgage Rate Forecast for 2024
Where are mortgage rates headed in 2024?
The Bank of Canada's impact on mortgage rates
The Bank of Canada (BoC) significantly influences mortgage rates through its policy interest rates. The BoC's key policy rate, known as the overnight rate, serves as a benchmark for other interest rates in the economy, including mortgage rates. When the BoC raises its policy rate, mortgage rates tend to increase, and vice versa.
Recent rate hikes and their impact on mortgage demand
In April 2023, the BoC raised its policy rate by 75 basis points (bps), marking the largest single increase in decades. This significant hike led to a surge in variable-rate mortgage rates, as lenders passed on the increased cost of borrowing to borrowers. Variable-rate mortgages, which are tied to the BoC's policy rate, became more expensive, while longer-term fixed-rate mortgages remained relatively stable in comparison.
Looking ahead: What to expect in 2024
The BoC has indicated that it will continue to raise interest rates in 2023 in order to curb inflation. This means that mortgage rates are likely to continue their upward trend throughout the year. However, it is important to note that the pace of rate increases is expected to slow down in 2024. As a result, mortgage rates should rise at a more gradual pace than they have in 2023.
Conclusion: Stay informed and prepared
As mortgage rates continue to change, it is important for prospective homebuyers and existing homeowners to stay informed about the latest developments. By closely monitoring the BoC's policy decisions and consulting with financial advisors, individuals can make informed decisions about their mortgage financing options and prepare for the potential impact of rising rates on their monthly budgets.
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