When it comes to mortgages, 2023 year was undeniably interesting. Looking ahead, we hope for a phase of interest rate normalization and improved options for buyers and those with mortgages renewing in 2024.
2023’s Fixed Rate Drop
Moving into specifics, in Q4 2023, fixed rates dropped significantly (by 1.1% to 1.5%), providing relief for borrowers. There is growing anticipation of Prime Rate cuts starting in the spring and continuing through 2025. Although there are no guarantees, all signs are pointing to lower rates in 2024 and 2025 with financial markets predicting a 0.50% -1.00% reduction by September 2024.
Bank of Canada’s First Decision of 2024
Despite inflation exceeding 3%, the Bank of Canada held the overnight rate steady at 5% in the first policy decision of 2024. The next Bank of Canada announcement is scheduled for March 6th, 2024.
Mortgage Renewals in 2024
Mortgage renewals will be a hot topic in 2024. Renewing clients face significant rate increases, with the Bank of Canada predicting payment hikes of up to a third to a half for mortgages maturing in 2024/2025. To ensure optimal outcomes, strategic decisions are crucial.
Three Key Pieces of Advice for 2024
- Avoid 5-Year Fixed Rates:
Lenders are promoting 5 year fixed rates, but given declining trends, it’s likely the worst choice now. There are very few reasons to lock in for 5 years at the present time. - Caution with Early Renewal:
Some lenders advise early mortgage renewal, but it often means forgoing a lower rate for a higher one. Remember, time is on your side now. - Consider Debt Consolidation:
Explore consolidating unsecured debts or loans when your mortgage matures, without penalty. Take the opportunity to evaluate your financial priorities.
Book a Chat for Financial Guidance
Consider booking a time to chat to ensure you’re on the right financial track. We will explain your options to help you make informed decisions, potentially saving you thousands of dollars. Think of this as an annual check up, without the fluoride.
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