Bank of Canada Interest Rate Update - January 2024

I hope that your year is off to a healthy and successful start!! 

The Bank of Canada (BoC) met for its first meeting of 2024, on January 24th and made the decision to leave rates unchanged once again. Our economy is slowing and inflation is continuing to ease, and it is very much anticipated that we are now at the end of the rate hiking cycle. The BoC has even removed the language of rate increases still being on the table.. the next step now are rate cuts, and the only question remaining is when those will materialize.

To read the official January 24th announcement, please click HERE

Unfortunately the US economy is still showing little sign of contracting, and our inflationary data in Canada is still not where we need it to be, yet, but we are slowly getting there. The first rate cut expectations for Canada have now been moved to June or July this year, but it is anticipated that we should still see a 1.00% reduction in interest rates by the end of 2024. From there, rates are projected to ease by another 1.00% by the end of 2026. With all that being said, our economy still has a ways to go before we are out of these very challenging times. Especially with nearly 2.2 million mortgages that are up for renewal in 2024 and 2025, the payment shock to an already squeezed population will have an impact on all borrowers, and our economy as a whole. The consequences of the BoC not acting and reducing rates before this time will not be pleasant for anyone.

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. And if you have a mortgage that is coming up for renewal in 2024 or 2025, please reach out to me so that we can work together on a plan to ensure you are prepared.

What does this rate announcement mean for you?    

If you have a fixed rate mortgage, nothing changes for you today. However, as mentioned, if you have a mortgage that is up for renewal in the next 12-24 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!! And let's hope for some relief soon! 

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.

Do not make any changes until we have talked. It is so important that you fully understand the implications of any changes that you make to your mortgage, and the branch staff is not trained to properly advise you on this. I am your trusted advisor, this is what I am here for and I am happy to help!

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 today don't work for my situation. With that said, many of our clients are seeing an opportunity to save right now if their variable rate is high enough, and especially for our clients who have other high interest debt with payments that are becoming unmanageable. 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:

• 1 year fixed @ 6.59%*

• 2 year fixed @ 5.94%*

• 3 year fixed @ 5.09%*

• 4 year fixed @ 5.09%*

• 5 year fixed @ 4.79%*

*Conditions apply

I believe there may be a time in the next 12-18 months where fixed rates are low enough that locking-in might make more sense. I will continue to monitor this for you, and will let you know when I think there may be opportunities.

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 please send it to me and I will help you with a strategy. Do not make any changes until we have talked. It is so important that you fully understand the implications of any changes that you make to your mortgage, and the branch staff is not trained to properly advise you on this. I am your trusted advisor, this is what I am here for and I am happy to help!

Our team is here to support you every step of the way! 

I hope that you have an amazing week!