As 2024 unfolds, mortgage rates in Canada are in focus, influencing homeowners and prospective buyers alike. Mortgage rates represent the interest charged on housing loans, helping citizens afford homes even when they don’t have sufficient funds upfront.
These rates fluctuate based on several economic factors, including inflation, and are influenced by the decisions of the Bank of Canada.
This article delves into the latest changes in Canadian mortgage rates, what has influenced them, and how they vary across provinces. Whether you’re a first-time homebuyer or refinancing an existing mortgage, it’s crucial to understand these rates.
The Relationship Between Mortgage Rates and Inflation
Mortgage rates are directly tied to inflation in Canada. When inflation rises, mortgage rates follow suit to counter the pressure on the economy.
However, if inflation decreases, mortgage rates can be adjusted downward. In 2023, Canada experienced high inflation, which peaked at 7% in December, pushing up the mortgage rate to 5%. As inflation began to ease in mid-2024, so did mortgage rates.
Key Mortgage Rate Changes in 2024
Throughout the first half of 2024, inflationary pressures persisted, keeping the mortgage rate at 5%. However, from June 2024, inflation began to decrease, and the Bank of Canada responded by cutting the mortgage rate by 0.25%.
By July, mortgage rates had decreased further to 4.5%, making borrowing cheaper and potentially stimulating the housing market.
2024 Mortgage Rate Timeline
| Date | Mortgage Rate | Change |
|---|---|---|
| 24th July 2024 | 4.5% | -0.25% |
| 5th June 2024 | 4.75% | -0.25% |
| 10th April 2024 | 5% | – |
| 6th March 2024 | 5% | – |
| 24th January 2024 | 5% | – |
| 6th December 2023 | 5% | – |
As of now, the Bank of Canada remains cautious but optimistic about further reductions in mortgage rates if inflation continues its downward trend. The decrease to 4.5% in July 2024 has already made borrowing more affordable, encouraging more people to buy homes or invest in real estate.
Provincial Housing Market Trends
Mortgage rates can influence home sales, and different provinces are reacting in unique ways to the recent cuts in mortgage rates.
- Ontario: Home sales surged by 10.1% in June 2024, with 39,164 new residential listings compared to 38,445 in April. The lower mortgage rates likely contributed to this growth.
- British Columbia: Despite the rate cuts, BC saw a decline in residential units sold, down 19% from the previous year. However, this province showed only a 1% increase year-over-year, indicating a slower housing market recovery.
- Alberta: The housing market here performed positively, with a 6.3% increase in home sales, showcasing robust demand even amidst economic shifts.
Mortgage Rate Announcements in 2024
The Bank of Canada has scheduled several key announcements regarding mortgage rates in 2024. These updates are essential for homeowners and buyers, as they signal potential changes in borrowing costs. Below is a list of upcoming announcement dates for 2024 and beyond:
| Date | Description |
|---|---|
| 4th September 2024 | Announcement of rate |
| 23rd October 2024 | Rate announcement & Monetary Policy Report |
| 11th December 2024 | Announcement of rate |
| 29th January 2025 | Rate announcement & Monetary Policy Report |
| 12th March 2025 | Announcement of rate |
| 16th April 2025 | Rate announcement & Monetary Policy Report |
| 4th June 2025 | Announcement of rate |
| 30th July 2025 | Rate announcement & Monetary Policy Report |
| 17th September 2025 | Announcement of rate |
| 29th October 2025 | Rate announcement & Monetary Policy Report |
| 10th December 2025 | Announcement of rate |
What Does This Mean for Homebuyers?
For potential homebuyers, 2024 is shaping up to be an opportunistic time, particularly as mortgage rates decline. Lower rates mean reduced monthly payments, making homes more affordable.
This reduction could also encourage refinancing for current homeowners looking to lower their mortgage payments.
Additionally, Tiff Macklem, CEO of the Bank of Canada, has suggested that if inflation continues to decrease, more rate cuts could be on the horizon. This would make housing even more accessible, further boosting the real estate market.
Impact on the Economy
The recent adjustments in mortgage rates have broader implications for the Canadian economy. With the population growing at a faster rate (3%) compared to the economy (1.5%) in 2024, demand for housing remains strong.
However, the supply of housing is increasing as well, potentially easing some pressure on the market.
Lower mortgage rates make it cheaper to borrow, which in turn could spur more investment in real estate. This increased spending has the potential to fuel further economic growth in the housing sector and related industries.
As mortgage rates in Canada decrease in response to falling inflation, prospective homeowners and investors have much to consider.
With rates currently sitting at 4.5% and further cuts possible, the housing market could become even more favorable for buyers.
Whether you’re planning to purchase a home, refinance, or simply keeping an eye on the market, understanding these shifts in mortgage rates is key to making informed decisions.
FAQs
What is the current mortgage rate in Canada?
As of July 2024, the mortgage rate is 4.5%.
How often are mortgage rates revised?
Mortgage rates are typically revised following Bank of Canada announcements, several times a year.
Why are mortgage rates decreasing in 2024?
Rates are decreasing due to falling inflation, which reduces borrowing costs.
Will mortgage rates decrease further in 2024?
If inflation continues to drop, the Bank of Canada may cut rates again.
How do mortgage rates affect homebuyers?
Lower mortgage rates make borrowing cheaper, reducing monthly payments for homebuyers.
