The Road Ahead - Benchmark Mortgages

Market predictions came true today as the Bank of Canada maintained it’s key interest rate (also known as the ‘overnight rate’) at 4.50%. But there’s much more to know and understand than the usual press release which arrived this morning at 10:00 (ET). So let’s dive in.

As more households renew their mortgages at higher rates and restrictive monetary policy works its way through the economy more broadly, consumption is expected to moderate this year.

The Bank of Canada (BoC) Governor, Tiff Macklem, in his opening remarks today stated “We are encouraged that inflation is declining, and we are seized with the importance of staying the course and restoring price stability for Canadians.” However, it’s too soon to start celebrating just yet. While inflation came in at 5.2% in February (down from 5.9% in January), the target for the BoC remains at 2% with forecasts to be “around 3% this summer.” Thus we should all be prepared as the BoC is “prepared to raise the policy rate further to get there.”

Changes in the policy interest rate lead to similar changes in short-term interest rates. These include the prime rate, which is used by the banks as a basis for pricing variable-rate mortgages. A policy-rate change can also affect long-term interest rates, especially if people expect that change to be long-lasting.

Also of interest, no pun intended, is the quarterly report known as the Monetary Policy Report which was released today with its assessment of risks facing our Canadian economy. Here’s a short video summary:

Benchmark’s view on today’s press release and last months has not changed! Prepare for the road ahead. Since buying or owning a home is not only the largest purchase most people make in their lifetime, it’s also the largest financial obligation. Changes in interest rates can make a big difference in how much you’ll pay over the life of the mortgage. If you’re wondering how (or if) you can hang on until rates come down, let’s have a conversation. Together, we can formulate a plan that will keep you on track financially.

If you’re mortgage is up for renewal in 2023? If so, let’s talk now. Over 1 million mortgages in Canada are up for renewal in 2023, according to CMHC. Timing is everything as there are many factors go into the interest rate you pay.
Purchase in 2023? If so, let’s talk now. Let’s discuss the short and long-term strategies for both fixed and variable rates. Not all mortgages are created equal even if the rates from two different lenders are the same.
Experiencing budget crunch? If so, let’s talk now.Let’s see if there are ways we can lower your overall monthly expenses by exploring refinancing options to allow for more breathing room in your monthly budget.

Looking for more insights?

Monetary Policy Report – April 2023

Remarks by Tiff Macklem: Press Conference

Bank of Canada Announcement – April 12, 2023

Note: The next scheduled date for the Bank of Canada announcement will occur on Wednesday, June 7, 2023.

Final Thought: The Bank of Canada will reduce interest rates once it deems inflation is under control and the economy once again requires its intervention to begin revival. To that end, we are happy to serve the local community as your Edmonton Mortgage Broker team. And you can find out more on what makes us different ~ it’s our Benchmark Promise. Believe in Better®. Please contact us at any time if we can be of assistance as you review your real estate fianancing goals and plan for the future.

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