Where are mortgage rates heading? We’ve got your 2023 Mortgage Rate Forecast & Trends! While it’s still quite early to know for sure, economists suggest that there are more rate hikes to come as the Bank of Canada has several mortgage rate announcements scheduled over the next several months.
Battling Canada’s Inflation
Since March of 2022 the Bank of Canada has done eight consecutive rate hikes in an effort to tighten their lending policies and help bring down inflation. It seems to be working: in December 2022 inflation was down to 6.3% from a high of 8.1% in June of last year.
Canada also received higher-than-expected job numbers at the end of the 2022 with 104,000 new jobs added in December with 85,000 of them being full time. The fact that employment began racing upward in the fourth quarter is something the Bank of Canada is likely to take into consideration as it continues ahead with the scheduled rate hike or reduction announcements.
Upcoming Bank of Canada Policy Announcements
The following are the upcoming dates set for 2023 rate and policy announcements:
- March 8, 2023 – Interest rate announcement
- April 12, 2023 – Interest rate announcement and Monetary Policy Report
- June 7, 2023 – Interest rate announcement
- July 12, 2023 – Interest rate announcement and Monetary Policy Report
- September 6, 2023 – Interest rate announcement
- October 25, 2023 – Interest rate announcement and Monetary Policy Report
- December 6, 2023 – Interest rate announcement
Reader’s note: these announcements do not necessarily mean the rates will go up each time. It only means the Bank of Canada will be telling the public whether interest rates will be going up, down, or stay the same. In this cooling Canadian real estate market, a lot of people are crossing their fingers that the rates will start to go down again.
What Does it Mean for Your Chequebook?
While no one likes the idea of interest rates going up, up and up, it actually not all doom and gloom. Forecasters are suggesting that the Bank of Canada will likely pause the rate hikes in the coming months while they’ll continue to monitor the inflation rate.
In fact, the National Bank of Canada says that “interest rates will not need to be kept at current levels for very long to brake inflation and we accordingly expect the Bank to be obliged to lower them in the second half of [2023].” (Source: https://www.canadianmortgagetrends.com/)
How Have Rate Increases Affected the Current Housing Market?
The recent interest rate hikes have had a notable impact on the current real estate market. In early 2022, the housing market was characterized by a frenzy of activity with homes selling far above their asking price as buyers were forced to engage in competitive bidding wars. However, these recent rate increases have actually helped to temper this overheated market.
As a result of the increased rates, home prices have started to come down significantly and created a larger inventory of houses for sale. This has given potential buyers more options to choose from and the lower home prices have helped to keep monthly costs for homeowners relatively steady.
“Marry the Home, Not the Interest Rate“
This is a phrase The Kate Broddick Team has coined and been using often over the last several months because it is the right mindset to maintain in this market—especially if you’re in the market to buy a home.
In the simplest of terms it means to allow yourself to fall in love with the house you want. Mortgage rates will always fluctuate and if forecasters are correct, we’ll be lucky to see interest rates come down again which will translate into your monthly costs becoming lower.
If you see the home you want and you can manage the payments now, this could actually be the best time to reap the rewards for later as interest rates start getting cut.
Just talk to your mortgage adviser. They will help you formulate a low risk plan that includes locking in a rate for 2-3 years vs a 5 year fixed rate, which will let you gauge how these announcements will play out and how they will affect your affordability.
Now is the Time to Beat the Rush!
As we inch closer to warmer temperatures and the historically busier spring market in real estate, you may want to consider shopping for your next home now. At this time of the year we always tend to see an influx of home buyers—and that means there will be more competition to purchase that home you’ve been eyeing up.
If you’re seriously considering jumping into the market, it is a great time to sign up for new home listings delivered daily to your inbox so you can see what’s available for sale right now, what becomes available before the public does, and your desired price range and location. Choosing the trusted expertise of the Kate Broddick Team of REALTORS® is the best and easiest way to get started on your home buying journey!
