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Canadian inflation slowed in December and experts think this could support a final policy rate hike by the Bank of Canada next week. Many Canadians are looking at their mortgage analysis to see if there are better options available.Client First Mortgage Solutions Mortgage Analysis

Statistics Canada reported the consumer price index(CPE) rose 6.3% on a year-over-year basis in December.  This was slower than the 6.4% gain that economists had anticipated.

Since March, the Bank of Canada has aggressively raised interest rates seven consecutive times, in response to decades-high inflation.  Its key interest rate is currently 4.25%, the highest it’s been since 2008.

Though inflation has eased in recent months, it’s still well above the Bank of Canada’s 2% target.  The Bank of Canada signalled last month a willingness to press pause on the rate hiking cycle, but many economists expect the Canadian central bank will increase its key policy rate by 25 basis points(bps). Their next meeting is scheduled for January 25th.

Canadian home prices fell by the most on record in 2022, as rapidly rising interest rates forced a market adjustment that may have further to go.

The country’s benchmark home price fell 1.6% in December to $730,600, bringing the total decrease since February’s peak to 13.2% according to the Canadian Real Estate Association.

A record number of buyers used floating-rate debt for purchases during Canada’s pandemic-era real estate boom.  Those borrowers may come under increasing strain if mortgage costs remain high.  Job losses from an economic slowdown, also would make it harder for people to keep up with loan payments and stay in their homes.

With the economy in danger of entering a recession, and the Bank of Canada warning of more rate hikes to counter persistent inflation, the housing market may face continued pressure in the coming months.  The Economists expect a recession later in the first half of 2023 and into the end of the year.

If you are looking at other mortgage options, contact us today to do a mortgage analysis for you.

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