Bank of Canada Interest Rate Update - September 2023

The Bank of Canada (BoC) met on September 6th and made the decision to pause their interest rate hikes, for now. While it is widely anticipated that we are at the end of the rate hiking cycle, the BoC has remained very clear that they are prepared to increase rates further if needed. Variable rate borrowers should remain cautiously optimistic. 

To read the full report on the September 6th announcement, please click HERE
 

The economy is definitely showing signs of slowing now, which is positive news for the hope of future rate cuts. However while the economy is slowing, our inflationary data is not showing the same downward momentum that we would have hoped. It is possible to have a slowing economy and rising inflation at the same time, and this is a big concern of the BoC. If this continues, it will be a very challenging time, as it already is, for many homeowners whether in a variable rate mortgage or not. Those fixed rate borrowers whose mortgages are coming up for renewal are now also feeling the strain of increased rates and large payment shocks. 

The expectation today, although impossible to accurately predict, is that rates will likely remain at current levels, with the possibility of further hikes, until about the end of 2024 or the beginning of 2025, when we are expecting to see the start of our rate cuts. Rates are projected to be down by about 1.50% by the end of 2026, with possibly another 0.25% drop by 2027. And so, as previously mentioned, although the end of rate hikes may be in sight, we still have a ways to go. As such, my top recommendation continues to be that we must ensure your financial house is in order so that you are better able to weather this storm, and I am here to help you through this. Please do not wait to reach out to me until it’s too late. If you have any high interest debt or are struggling with your payments, I am here to help.

If you are at risk of missing ANY payments, credit cards or personal loans/LOCs, but especially a mortgage payment, I urge you to call me first. If you own a home, there are solutions for you! And lenders are willing to work with borrowers who are struggling with payments to ensure we support all Canadians through this difficult time. So please do not wait until it's too late to ask for help. 
 

What does this rate announcement mean for you?    

If you have a fixed rate mortgage, nothing changes for you today. However, if you have a mortgage that is up for renewal in the next 6-12 months, we should definitely talk so that we can make a plan to prepare you for the likely higher payment that you may face. 

If you are in a variable rate mortgage, no changes for you either. FINALLY! 
 

If you are in a "fixed payment - variable interest" product...    

And your payments have not yet changed, then you have likely hit or passed your "Trigger rate", and you may be nearing your "Trigger Point". It is important that you understand the consequences of this, so please reach out to me so that I can explain your specific situation and my recommendations for what to do. You have great options in this product, until you don't, so please don't wait until it's too late to reach out to me for my suggestions on what to do.
 

Should I lock-in my variable rate now?   

If locking-in to a fixed rate is something you are considering, let's talk. You may want to consider a short term fixed rate, which can offer you the fixed comfort today while still being able to renew at a time when rates are (hopefully) lower. 

I am personally going to continue to ride this out in my variable rate mortgages, as the current lock-in rates are too high for it to make sense for me. However, my budget can support the risk of staying variable, and the lock-in rates don't work for my situation, but many of our clients are seeing an opportunity to save right now if their variable rate is high enough. If you have any concerns and are thinking of locking-in, please let me know and let's work together to brainstorm the right strategy for you. 

Some of our lowest fixed rate options available today:

2 year fixed @ 6.14% - 6.89% 

3 year fixed @ 5.99% - 6.49%

4 year fixed @ 5.54% - 6.24% 

5 year fixed @ 5.39% - 6.14%
 

I want to lock-in to a fixed rate, what do I do now?    

Contact your lender directly and ask them what rate they will offer you to lock-in. Request all terms available to you, including 2 or 3 year rates if possible. Once you have that information if you would like our help, send it to me and I will help you with a strategy.  
 

Our team is here to support you through this! 

I hope you have a beautiful day.