Bank of Canada’s Latest Interest Rate Update and Its Impact
The Bank of Canada recently announced a 25 basis point decrease, lowering the policy rate to 4.25%. This marks the first rate cut after a long series of increases aimed at curbing inflation. While the effects of rate changes can take up to four fiscal quarters to fully manifest, the Canadian economy is now experiencing the impact of 10 previous rate hikes.Mortgage Renewals in Canada
Nearly half of all Canadian mortgages, or approximately 2.2 million, are up for renewal over the next two years. As a result, many homeowners will face higher mortgage interest rates upon renewal.Key Takeaways
- The current prime rate is 6.45%.
- Canada’s inflation rate is 2.0%.
- Interest rates have begun to decrease, with more cuts forecasted for the coming months.
Best Mortgage Rates
| Province | Rate Type | Interest Rate |
|---|---|---|
| Ontario | 3 Year Fixed | 4.69% |
| Ontario | 5 Year Fixed | 4.04% |
Mortgage Rate Forecast for Canada (October 2024)
The mortgage rate forecast for Canada shows that rates are expected to decrease by 75 to 100 basis points by the end of the year. However, these predictions can change based on geopolitical and macroeconomic conditions.| Bank | Policy Rate (Oct 2024) | Policy Rate (Dec 2024) |
|---|---|---|
| BMO | 4.00% | 3.75% |
| CIBC | – | 3.50% |
| National Bank | – | 3.50% |
| RBC | – | 3.75% |
| Scotiabank | – | 3.75% |
| TD | – | 3.75% |
Interest Rate Decrease Predictions for 2024
As of October 2024, most experts predict multiple rate cuts next year, with a potential cumulative decrease of up to 100 basis points. This is largely due to the belief that inflation is under control and that monetary policy no longer needs to be restrictive.Bank of Canada Interest Rate Predictions for 2024
Impact on the Housing Market
The economy is starting to feel the effects of past rate hikes, with home sales volume dropping due to increased borrowing costs. Sales may continue to decline unless rates decrease or sellers significantly reduce prices.Home Sales Trends
Bank of Canada Rate Change Schedule
| Date | Rate Change | New Policy Rate |
|---|---|---|
| January 24 | No Change | 5.00% |
| June 5 | -0.25% | 4.75% |
| September 4 | -0.25% | 4.25% |
| October 23 | Expected Change | TBD |
Consumer Price Index (CPI) 2024 Release Dates
| Date | CPI Year-over-Year Change |
|---|---|
| January 16 | +3.4% |
| March 19 | +2.8% |
| June 25 | +2.9% |
| September 17 | +2.0% |
