2024-03-07 | 07:15:12

Yesterday The Bank of Canada held the overnight rate (which affects variable rate mortgages) at the current level, but there are clear signals that the two-year run of higher interest rates is nearing its end. Inflation figures have been receding to a more normal range, and the fixed mortgage rates have been declining in anticipation of a lower prime rate in the near future.

This is welcome news to homeowners with mortgage renewal dates coming up as well as with variable rate mortgage holders. One of the most interesting narratives to inflation this past year was that The Bank of Canada insisted on keeping the overnight rate elevated to curb increasing consumer prices, yet the largest contributor to inflation was higher mortgage and rent costs. I am not a rocket scientist, but the irony of their stance was not lost on me.

Over the last twenty-five years, each time the Bank of Canada has raised rates significantly, it tends to go down within one or two years by an average of 3.50%. In 2001 the ‘prime’ rate went up to 7.25%, and within a year it was 4%. (after 9/11). Between 2006 and 2008 it went up to over 6%, and in 2009 it dropped to almost 2% (US Financial Crisis). In 2018 it went up to 4%, and then quickly went down to almost 0% (COVID-19). Currently it is over 7%.

The Bank of Canada has a track record of raising the overnight rate too high too quickly, forcing a retreat before too long. So yes, we should see rates down by at least 1.50%, and probably within two years if history is any indication.

Six reasons to give me a call:

1/ you or someone you know has a mortgage renewing this year. I have a tried and tested strategy that I have been using for twenty-five years to ensure that homeowners renewing their mortgage get the best possible rate.

2/ you are thinking about moving in the next two years. There are things we can do now to prepare.

3/ you want to explore reducing your debt load and increasing your cashflow. If this applies to you, call sooner rather than later as most banks have interest rate tiers based on credit scores. Carrying credit card or line of credit debts that are at or near their limits is just as damaging to your credit score as missing payments.

 4/ you are, are you know, someone over the age of 65 that wants to stay in their home but is having a harder time keeping up with their expenses and retirement plans and goals.

5/ you want to talk about the Toronto Maple Leafs or Toronto Blue Jays.

6/ you wanted to talk about anything else, anytime. If I am not already on the phone or meeting with a client, I will answer my phone. Try that at your local bank branch 

 

Many thanks,…Patrick
905-299-4665