The Canadian mortgage landscape has been a rollercoaster for the past two years. As we move into the second half of 2024, the primary question on every homeowner's mind is: When will rates finally come down?
The Bank of Canada Stance
The Bank of Canada has maintained a restrictive policy to combat inflation. However, recent CPI data shows that price pressures are easing closer to the 2% target. Analysts suggest that we might see the first signs of easing by mid-summer, provided the labor market remains stable.
Fixed vs. Variable: The Current Dilemma
Fixed rates are currently priced lower than variable rates, which is an "inverted" scenario. This happens when markets expect rates to fall in the future. For many Canadians, a 3-year fixed term is becoming the "sweet spot" to bridge the gap until lower rates arrive.
What Homeowners Should Do
If your renewal is coming up in the next 6 months, don't wait until the last minute. You can often lock in a rate with a new lender 120 days in advance. This "rate hold" protects you from increases while allowing you to benefit if rates drop further before your actual closing date.