2024-04-11 | 11:28:12

The Bank of Canada released their overnight interest rate decision earlier today and as expected, they have left it unchanged at 5.00%, which means that the majority of banks in Canada have their mortgage prime rate at 7.20%. The good news for variable rate mortgage holders out of today’s announcement was that wage growth is slowing gradually, and unemployment numbers are rising slightly. A rate cut of .25% is not out of the question at the next Bank meeting on June 5^th.

The U.S., on the other hand, is still seeing record job creation and strong consumer spending, as well as higher than expected business and government spending. This has caused the U.S. Bond Yields to increase, and when this happens, our Canadian Government Bond Yields get dragged along upwards with them. Fixed mortgage rates are set by the bond yields, so it is very probable that you will be hearing on the news later this week that fixed mortgage rates will be increasing. If this trend continues, we could see our inflation numbers creep up again as mortgages and rents increase, delaying any possible Bank of Canada overnight rate cuts. Yes, it is a tangled web.

This brings us back to a point I made in last month’s update: if you know of anyone with a mortgage renewing in 2024, have them contact me now to plan out a strategy to secure the lowest possible rates. I have had several calls and emails from potential clients saying they aren’t in a rush because ‘they heard rates are going down’…but if they are leaning towards a fixed rate as most people do (see below), they might have missed the low point.

Here are a few other general items and statistics I found interesting that came out this week:

• The average mortgage size arranged in the first quarter of 2024 in Ontario was $488,768.

• This number is down 3.6% from Q3 2023.                                                                                                           

• In Q1 2024, 65% of new mortgages were on a fixed rate, and 29% were on a variable rate. The other 6% were hybrid mortgages (some of which are great and some of which are really bad, I’ll write about those another day).

There are some important new releases coming up that I am keeping my eye on. On Monday next week the March Canadian Home Price Index comes out. February’s number was the same as January, and that had ended five straight months of declines. Then on Tuesday the Consumer Price Index number is released. This will probably be the biggest clue to whether the Bank of Canada lowers the rate in June. Last month’s number was 2.8%, let’s hope for something lower than that.

As always, feel free to share this update with anyone you think might be interested, and please do not hesitate to contact me if you have any questions about your mortgage.

Many thanks,…Patrick