Get Ready, Canada: Exciting Deals and Lower Rates Coming in 2024!
December 24, 2024
0 2 minutes read
As inflation returns to the Bank of Canada’s target of 2%, anticipation builds for continued rate cuts leading into 2025. This signals a promising trend for mortgage seekers eager for better rates and opportunities. (Getty Images) · Witthaya Prasongsin via Getty Images
With inflation back in check, many experts predict a wave of lower mortgage rates as we move into 2025. This is your chance to snag the best deals on home financing!
After years of grappling with rising interest rates, Canadians are finally seeing a shift. Following a series of rate cuts, including significant reductions in October and December, the Bank of Canada’s policy rate now stands at 3.25%. Economists forecast that this trend will continue, albeit at a more measured pace.
With interest rates on the decline, 2025 may very well be the year of the variable-rate mortgage! Embrace the potential savings as the market shifts.
Mortgage rate specialist Penelope Graham points out that while variable rates are likely to fall, fixed rates might remain stubbornly high since they’re influenced by the bond market. As of now, yields for the 5-year benchmark bond have been fairly steady.
“We haven’t seen much movement in fixed mortgage rates lately, and we don’t anticipate significant changes in the coming months unless something major shakes the market,” Graham remarks.
Victor Tran, a mortgage expert, notes that interest in variable rates surged as the central bank cut its benchmark rate. Homeowners are recognizing a potential short-term sacrifice for long-term gains.
“Customers are willing to accept a higher variable rate now because they see a brighter future ahead,” Tran shared in an interview.
Both Graham and Tran anticipate that by 2025, variable-rate mortgages could dip below fixed rates, making them an even more appealing option for savvy homebuyers. However, fixed-rate terms remain a popular choice among Canadians.
With approximately 40% of mortgages up for renewal as we approach 2025, Canadians may feel the pressure of adjusting to potentially higher rates. Nonetheless, the current competitive landscape among banks offers a silver lining for consumers seeking favorable deals.
“For anyone facing renewal soon, brace for higher payments, but also keep an eye out for competitive offers as banks aim to attract and retain customers,” Tran advises.
“With rates trending down, there’s a sense of relief. The removal of the mortgage stress test for renewals gives Canadians more power to negotiate and explore their options.”
The Office of the Superintendent of Financial Institutions has made it easier for borrowers with uninsured mortgages to switch lenders, enhancing flexibility in the market. Graham predicts a competitive environment where enticing offers may emerge.
“We expect to see some exciting rate wars as banks strive to capture new business,” Graham notes. “Promotions may lead to fierce competition among lenders, benefiting consumers.”
However, caution is warranted when considering the economic landscape as we head into 2025. Potential tariffs on Canadian imports could create significant uncertainty. Graham emphasizes the importance of staying informed about these developments.
“The looming question remains: will these tariffs materialize? If they do, we could face an entirely different economic scenario,” Graham warns.
“A potential trade war could cause inflation to spike again, altering the Bank of Canada’s course of action. This is a crucial consideration for anyone analyzing future market trends.”
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