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Mortgage MarketMortgage Market Predictions in Canada: 2024

The interest rate outlook in Canada for the year ahead is a topic that has captivated the attention of both prospective homebuyers and industry experts. The direction of interest rates is expected to significantly influence Canada’s housing and mortgage markets in 2024.

Interest Rate Trends in 2024 – Fixed vs. Variable Rates

Dropping interest rates, both on fixed and variable fronts, are projected to be key interest trends in Canada’s mortgage market this year. Major banks have already responded to plunging bond yields by reducing fixed rates. Meanwhile, the spotlight is on the Bank of Canada, with uncertainty surrounding when and how much it will cut its benchmark rate, influencing variable mortgage rates.

Banks’ Rate Forecast and Their Implications

Digital mortgage brokerage nesto’s forecast reveals that leading banks, including BMO, RBC, Scotiabank, CIBC, and National Bank, anticipate a lower central bank policy rate by the end of 2024. These projections range from 3.25% to 4.0%. The implications of these forecasts are crucial for both borrowers and the housing market.

Impact of Rate Cuts on the Housing Market

Prospective homebuyers are closely monitoring rate movements, and a potential rate cut by the Bank of Canada could be welcome news for the mortgage market. However, a significant rate cut might lead to a surge in market activity, potentially causing an upswing in home prices. Striking a delicate balance between affordability and controlled price increases is crucial for a healthy real estate market.

Inflation, Housing, and the Bank of Canada’s Decision Making

Recent developments in inflation and the surprisingly resilient end to 2023 in Canada’s housing market have implications for the Bank of Canada’s decisions. With core inflation showing upwards trends, rate cuts might not be on the immediate horizon. Industry experts, like BMO’s chief economist Doug Porter, suggest that the central bank is likely to maintain a cautious stance, impacting housing and mortgage market activity in the early months of 2024.

Strategic Considerations for Homebuyers in 2024

While the market may experience subdued activity in the initial months of the year, prospective homebuyers are advised to consider moving sooner rather than later. Waiting for clearer signals might result in a more competitive market  by mid-year.

The Takeaway: Mortgage Market Predictions in Canada

Staying informed and adopting a strategic approach will be key for homebuyers. The delicate balance between interest rates, market activity, and affordability requires careful consideration and proactive decision-making.

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Original Article

Canadian Mortgage Trends – January 18, 2024

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