Brad Currie Senior Mortgage Broker

Brad Currie

Senior Mortgage Broker

201 - 23189 Francis Avenue, Langley, British Columbia







A look back at 2023 and what's ahead for 2024



As 2023 is now in the rear view mirror, lets review what happend and look ahead to what economists foresee in 2024

The past year demonstrated Canada's economic resilience through robust job growth and increased investments at the beginning of the year. However, by year’s end, the current high-interest rates had contributed to a slowdown in business and consumer activities, leading to forecasts of weaker growth in the first half of 2024. Despite this, economists anticipate the economy to begin to rebound in the latter part of 2024.

In 2023, the inflation rate began at 5.9% and gradually decreased to 3.1% by November (pending December's data). While the Bank of Canada doesn't anticipate inflation reaching its 2% target until late 2025, it aims for comfort within the 3% - 2.5% range. The evident impact of the Bank of Canada's rate hikes has resulted in prospective buyers feeling priced out of the market, impacting consumer confidence and leading to a 'wait-and-see' approach throughout 2023. Concurrently, the Bank of Canada's strategic rate adjustments have effectively moderated the housing market's pace, contributing to a gradual slowdown without significantly affecting property values in most parts of the country.

In 2023, Canadians also came to terms with the reality that rock-bottom interest rates are a thing of the past, and these new normal rates are now a permanent fixture. While we will see some modest decreases in rates in the coming year, many Canadians will no longer be able to delay their entry into the housing market in hopes of further rate drops.

Now, let's focus on what lies ahead in 2024:

There are emerging signs indicating the tangible effects of the Bank of Canada's (BOC) rate hikes are beginning to take root. Coupled with the anticipation of inflation dropping below 3%, we are finally witnessing movement in rates. Anticipated rate cuts from both the Bank of Canada and the US Federal Reserve have triggered a positive response in bond markets. This has resulted in lowered fixed rates, especially the 5-year rates, with some Insured rates dropping as much as 1%, fostering competition among lenders. As they gear up for the spring market, this competition benefits borrowers, especially first-time home buyers who have less than a 20% down payment.

There's a glimmer of hope on the horizon for Floating Rate holders (Variable or Adjustable). Most economists and markets are predicting a potential 100 - 150 bps rate cut to the current policy rate in 2024. However, the transition won't happen abruptly; the Bank of Canada (BoC) is likely to proceed cautiously, implementing gradual decreases while monitoring inflation and the economy. This will benefit Adjustable Rate holders with reduced mortgage payments and Variable Rate holders seeing a shift towards principal repayment.

With housing affordability and supply shortages pressing all levels of government, there will be a continued push for new construction developments aimed at bolstering the housing supply. Though this issue isn't something that will be swiftly resolved within a year or even a few, it remains at the forefront of all levels of government, underscoring the ongoing necessity of addressing the housing shortage.

What this all means for you, the consumer:

It’s estimated that about $251 billion in mortgages will come up for renewal in 2024, with another $352 billion worth in 2025. As a result, many Canadians will soon face a significant increase in their monthly mortgage payment—a major expense—and will have to adjust their spending. With that said, many lenders are going to be competing for your business. Working with professionals like myself, with access to multiple lenders, is essential, allowing for better rates and products. It will also be important to get ahead of your renewal so you can adjust the family budget for a certain increase in your monthly mortgage payment.

For those dealing with high-interest debt, now is an opportune time to consider refinancing for debt consolidation, especially with declining rates, providing a chance to manage debt effectively. Consider this the “reset button” that can get you back on track and increase your monthly cash flow.

Finally, as there's a growing anticipation that the period of interest rate hikes might be coming to an end, this prospect will rekindle buyer interest in the market. With the expected decrease in fixed and variable rates, increased purchasing power could spur more demand in the housing market, causing an uptick in values. Choosing a variable rate or a short-term fixed rate now enables you to buy before the surge in demand while also positioning yourself to secure a potentially lower rate in the near future rather than waiting for rates to drop significantly.

While uncertainties remain, it's crucial for those planning mortgage transactions in 2024 to review their needs sooner rather than later. Together, we can determine the best course of action that suits your family’s budget and needs.

I am here to assist whenever you are ready.


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