As anticipated, the Bank of Canada has decided to maintain the overnight rate at 5.0% for its final announcement of the year. The Bank noted that inflation is coming down in a “broadening range of goods and services” although rent and mortgage interest are keeping the shelter component of inflation very high and affecting our ability to approach the 2% inflation target. This is why the Bank of Canada will consider cutting rates before we officially reach that target.

In 2024, we expect the central bank to lower the overnight interest rate to stimulate the overall economy, assuming inflation remains under control. This news bodes well for over 50% of mortgages set for renewal in 2025 and 2026.

The major Banks predict that the overnight rate will drop 1 to 1.5% by the end of 2024. Many predict that the first rate cut could come as early as April 2024.

Source: Canadian Mortgage Trends

We also anticipate these rate cuts will have a positive impact on the Mississauga real estate markets and throughout Toronto and the GTA. With pent-up buyer demand, improved affordability thanks to lower rates and prices, robust immigration, and a chronic shortage of housing supply, we can expect increased activity in the housing market.

We continue to recommend to not wait for rates to drop to enter the housing market if possible. Paying a higher rate now at a lower home price is better than higher prices at lower rates.

It’s important to note that when home prices are below $1M, the minimum downpayment is 5% on the first $500,000 and 10% on the remainder.  When prices are over $1M, the minimum downpayment is 20%.  Don’t miss out on getting in on a low downpayment. You only need a small increase in price to offset the higher interest costs.

Purchasing when the market is down means less competition, no bidding wars, more time to decide, the ability to put conditions in offers, and sellers are more willing to negotiate. Remember that your rate only lasts for the term, while a great deal on a home lasts a lifetime!

If you need a mortgage or are planning to renew within the next six months, reach out to Joe Purewal, your trusted Mississauga Mortgage Broker, for a comprehensive review of your situation and expert advice. Given the complexity of the current market, it’s crucial to make the most informed decision possible.

If you aren’t financially ready but see a great opportunity to get into the Mississauga, Toronto, or GTA housing market at low prices, we can discuss these strategies:

  • Gifted downpayment
  • Co-signors
  • Co-ownership
  • Renting part of the home
  • Early inheritance
  • Borrowing from your RRSPs
  • Alternative lenders

The next Bank of Canada announcement is on January 24th, 2024. Stay tuned for more updates! Joe Purewal, the top-rated Mississauga Mortgage Broker, is committed to making sure you stay ahead of the game with timely insights on the mortgage and housing markets.