October 2024 Mortgage Market Update: Anticipating the Bank of Canada’s Next Move

As we head into the final quarter of 2024, the Canadian mortgage market continues to evolve amidst rising economic uncertainty and changing interest rate expectations. With the Bank of Canada’s (BoC) next rate announcement approaching, homeowners, buyers, and investors are keeping a close eye on potential shifts that could affect mortgage rates.

What to Expect from the Bank of Canada’s Upcoming Announcement

The Bank of Canada is scheduled to make its next interest rate announcement in late October, and speculation is growing about whether we will see another rate hold or a potential cut. So far in 2024, the BoC has held its key overnight rate at 5.00%, after a series of rate hikes last year aimed at controlling inflation.

With inflation starting to cool—though still above the target rate of 2%—the BoC is at a crossroads. Recent economic data, including slowing consumer spending and a softer housing market in some regions, may prompt the Bank to consider a rate cut, but that move is far from certain. Many experts believe the BoC will maintain rates for the time being, given concerns over sticky inflation and global economic uncertainty.

How Will This Impact Mortgage Rates?

Variable-Rate Mortgages

Variable-rate mortgage holders are likely wondering how this decision will impact their payments. The BoC’s overnight rate directly affects the prime rate, which in turn dictates the interest on variable-rate mortgages. If the BoC holds its rate steady, we can expect variable-rate mortgage payments to remain where they are for now. However, any sign of a future rate cut could lead to some relief down the road.

Fixed-Rate Mortgages

For those with fixed-rate mortgages or those shopping for one, it’s a bit more complicated. Fixed rates are more influenced by the bond market than by the BoC’s overnight rate. Currently, bond yields have been fluctuating as markets assess the balance between inflation risks and slower economic growth. If bond yields decrease, it could bring down fixed mortgage rates in the near future, but much will depend on the direction of inflation.

The Market Outlook for 2025 and Beyond

As we head into 2025, the mortgage market is likely to see some stabilization. However, the big question is whether inflation will continue to ease or whether external pressures—such as energy prices and global supply chain disruptions—will push prices higher again.

If inflation continues to cool and the BoC pivots toward rate cuts in early 2025, we could see variable mortgage rates fall, giving homeowners some much-needed breathing room. On the other hand, if inflation remains stubborn, the BoC may hold rates higher for longer, delaying relief for borrowers and keeping affordability a concern.

What Should Homeowners and Buyers Do?

If you’re a current homeowner with a mortgage renewal coming up or a prospective buyer, there are a few things to keep in mind:

  • Rate Holds: Many lenders offer rate holds for up to 120 days, allowing you to lock in today’s rates while you wait for more clarity.
  • Early Renewals: If your mortgage is up for renewal soon, now is the time to explore options. Even if rates dip later, you can always renegotiate or refinance at a better rate.
  • Fixed vs. Variable: Deciding between a fixed or variable-rate mortgage depends on your risk tolerance. If you prefer stability, a fixed rate may be best, but if you’re comfortable with some fluctuation, variable rates could benefit you if rates drop.

Conclusion: Stay Prepared

The upcoming Bank of Canada announcement is another chapter in what has been a turbulent year for the mortgage market. Whether rates stay the same, rise, or fall, staying informed and having a strategy in place is crucial.

If you’re looking to navigate this uncertain environment, now’s the perfect time to chat about your options. Whether you’re renewing, buying, or just curious about how these trends might affect you, feel free to reach out.