Canada Mortgage Rate Forecast 2024–2028: What You Need to Know

Introduction: Changes in Mortgage Rates

Canada’s mortgage rate forecast 2024 can be a little tricky. Mortgage rates in Canada have changed a lot over the past few years. During the pandemic, rates were very low. But in 2022–2023, the Bank of Canada raised rates quickly to fight inflation, making mortgages more expensive. Now, as inflation slows down, the Bank of Canada is starting to lower rates again.

Here’s a simple guide to what may happen to mortgage rates in the next 3–5 years and how it could affect you.

What to Expect for Canada mortgage rate forecast 2024

By late 2024, the Bank of Canada cut its main rate to 3.75%, which may lead to lower mortgage costs. Experts think more rate cuts will happen in 2024, possibly lowering rates by 0.75% to 1% by the end of the year.

Key numbers right now:

• Policy Rate: 3.75%
• Prime Rate: 5.95%
• Inflation: 1.6%, slowly going down

This means we could see better deals on mortgages soon, but unexpected changes in the economy might affect this.

What Experts Say About 2024 Rates

Economists predict the Bank of Canada will keep cutting rates carefully to help the economy and control inflation. By the end of 2024, the main rate could drop to 3.25%. This might make variable-rate mortgages more attractive, but fixed-rate mortgages may take longer to go down.

Short- and Long-Term Predictions

In 2024–2025: Homeowners with variable-rate mortgages could see lower monthly payments soon. People renewing mortgages in early 2025 might get better terms than in recent years.

In 2025–2028: If inflation stays under control, rates could slowly go down. Economists think variable rates might settle around 2–3%, and fixed rates might be 3.5–4.5% by 2028. However, big changes in the economy could shift rates up or down quickly.

What Affects Mortgage Rates?

1. Bank of Canada’s Decisions: The Bank of Canada decides the main interest rate, which directly affects mortgage rates.
2. Inflation: Lower inflation means the Bank of Canada is more likely to cut rates.
3. Jobs and Economy: When more people have jobs and wages rise, borrowing and spending increase, which can keep rates higher.
4. Global Economy: Canada’s rates are also affected by what happens in other countries, especially in the U.S.

How Do These Changes Affect You?

• For First-Time Buyers: Lower rates could make homes more affordable, but high home prices in cities like Toronto and Vancouver remain a challenge.
• For Homeowners: If you have a variable-rate mortgage, lower rates could mean smaller monthly payments. Fixed-rate mortgage holders renewing soon may also see better rates.
• For the Housing Market: Lower rates might lead to more people buying homes, which could push prices up in popular areas.

Conclusion: What to Keep in Mind for Canada mortgage rate forecast 2024

• Lower Rates in 2024: The Bank of Canada is expected to cut rates further, possibly up to 1% by the end of 2024.
• Immediate Relief for Some: People with variable-rate mortgages could save money quickly, while fixed-rate drops may take more time.
• Stability Ahead: If the economy stays stable, mortgage rates might settle at moderate levels by 2028.
• Affordability Still Tough: Even with lower rates, high home prices will remain a barrier for many.

By staying informed, you can plan better for your mortgage or next home purchase. Lower rates could create opportunities, so it’s important to keep an eye on changes in the market.

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Links:
https://www.bankofcanada.ca/publications/mpr/mpr-2024-10-23/projections/

https://www.cmhc-schl.gc.ca/professionals/housing-markets-data-and-research/market-reports/housing-market/housing-market-outlook