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The mortgage market has been a real rollercoaster in 2022, and rates have skyrocketed. The most common question to ask is “What should we expect regarding our mortgage rate in 2023, 2024, and 2025?
2021 and 2022 were certainly not easy years, and while economists and pundits were expecting rates to rise, the COVID-19 pandemic has certainly upended the Bank of Canada’s plans.
In March 2020, the government announced containment measures and hundreds of thousands of Quebecers became unemployed.
The banks agreed to put certain loans on hold, and the Bank of Canada announced that it was lowering its key rate to its lowest level, 0.25%.
But what should we expect for 2023? Will the situation continue to stabilize, will rates go up further, or can they come down quickly?
Discover the experts’ forecasts about mortgage rates for the year 2023!
After a few years of very low mortgage rates, mortgage rates saw a significant increase in Canada.
The Bank of Canada implemented several rate hikes in 2022 and does not rule out making more in 2023.
Until inflation and the economy, in general, are under control, interest rates seem to be on an upward trend.
But don’t panic. Professionals can advise you and discuss the current situation with you. If you need to talk, feel free to fill out our form and one of our partner mortgage specialists will get in touch with you.
Are you worried about rising interest rates? Speak with one of our partner specialists by filling out our form or calling the following numbers!
The mortgage market at the start of 2023 was very uncertain. After a very difficult 2022, buyers and owners are impatiently waiting to see what happens in the next months or until next year.
In 2022, mortgage rates nearly tripled – something that has rarely happened in Canada.
Now that rates are high and inflation seems to be on a downward trend, what can we expect for 2023?
Following the drastic increase in rates, several financial institutions, including Desjardins, believe that the end of rate increases is fast approaching.
In 2023, expect a more stable mortgage market where rates should not increase or decrease drastically.
It will then be all the more important to take the time to compare mortgage rates from multiple banks or lenders as they each try to attract customers with competitive rates.
If inflation drops considerably over the next year, many are anticipating a possible rate cut towards the end of 2023.
According to several economists, Canada and Quebec are headed for a short, mild recession in 2023. This is due to the particularly difficult economic context caused by the COVID-19 pandemic, and the major financial assistance granted by the governments.
We must, therefore, remain realistic and expect the market to come rebound gradually, following the evolution of the economic context in the country.
A recession often sounds dramatic, yet it is a common stage in a country’s economic cycle. Recessions are often short-lived.
It will, therefore, be something to watch during 2023.
If you have a project that needs financing, we recommend that you discuss it with an independent mortgage broker.
Indeed, mortgage rates in 2023 are not likely to drop significantly, but there are sometimes:
In times when interest rates are high, a good mortgage broker can give you tips on how to save on your mortgage payments.
He can compare the current rates of more than 20 banks, and calculate payment strategies to successfully save interest. Use our form if you want to talk about it with one of our partner brokers.
Now let’s look at the medium and long term. Is 2024 likely to be a more positive year for Canadian households in terms of mortgage financing?
Although it’s still a long way off, several economists are looking positively at the 2024 mortgage market. That being said, the 2024 mortgage forecast takes into account many key factors:
Some analysts are anticipating a possible drop in mortgage rates from the beginning of 2024. Nothing is certain, but if inflation decreases during 2023, it is a good possibility.
More optimistic experts predict that a drop in mortgage rates could come as early as the end of 2023.
2024 Mortgage Rate Prediction: Our prediction for 2024 is that rates will likely start to decline early in the year, and continue on a downward slide through 2025.
What about the mortgage forecast for 2025? While this seems like a long way off, it is actually quite close.
When asked, not all experts are unanimous about 2025, but here are some points that were mentioned:
Of course, there is no certainty, and even the Bank of Canada cannot confidently predict what the rates will be in 2025.
However, it is interesting to analyze the economic conditions and factors that will influence the market at that time.
2025 Mortgage Rate Prediction: We believe that the mortgage market will be back in favour of buyers in 2025, and rates will be much lower than in 2023.
Do you have a purchase, renewal or refinancing project in the next year and you wonder what the interest rates will look like?
The mortgage market in 2023 may still be quite high, but that does not mean that conditions will be negative.
Everyone agrees that the market in 2022 has been very negative due to the sharp increases in mortgage rates.
So what is the finding for 2023 mortgage rates?
Although no major rate cut announcement is expected, the mortgage market is expected to stabilize. There should be no more major rate hikes in 2023. On the contrary, a slight rate reduction is possible towards the end of the year.
We now know that the Bank of Canada’s objective in 2022 and 2023 is to gradually raise interest rates in the country.
What about 2023? What are the dates of potential hikes in Canada? Want to know when to monitor potential rate increases?
The policy rate announcement dates scheduled for 2023 are as follows:
On these dates, the Bank of Canada announces whether it will maintain its current rate, lower it, or increase it. Put these dates on your calendar if you have a variable rate as this will potentially impact your mortgage payments.
What are the factors that will influence interest rates in 2023, 2024, and 2025?
Once again, the Governor of the Bank of Canada recently explained that it is the evolution of the pandemic as well as the national economic recovery that will play a huge role.
The Canadian economy shrank by 5.7% in 2020, and between 2021 and 2022, inflation was extremely high.
The continued rise in consumer prices may be partially curbed by rising interest rates. The recent increases were supposed to curb inflation in the country.
It will take several years to stabilize the economic situation in Canada, so 2023 and 2024 will continue to be challenging.
With the current economic conditions, is it more advantageous to choose a fixed or variable rate for your mortgage?
Be aware that there is no absolute right answer to this, and you need to consider your risk tolerance and several assumptions that are not certain.
That being said, here are some things to think about that can help you make your choice.
Variable rates are often lower than fixed rates. For example, when you can have a variable rate of 3.90%, the lowest mortgage rates are around 5-6%. Even if rates increase, it would take some time to match the fixed rate. In the long term, it is proven that a homeowner wins by choosing a variable rate. In addition, the mortgage penalty in the event of cancellation is only 3 months of interest.
Fixed rates have increased in recent months. If you like security and don’t want to stress about possible rate hikes, securing a fixed rate may be to your advantage.
As of this writing, Canada’s 5-year Conventional Mortgage Lending Rate is at 5.81%, compared to 3.58% last year.
That being said, you should know that the penalty for early termination is much higher, and can exceed $10,000. For security, you may want to go with a fixed rate.
Now that we know that rates will most likely move in 2023, what can we expect in terms of mortgage rate offers in the market?
We consulted the databases and websites of major financial institutions in the country to create a comparative table presenting some of the best rate offers at the start of 2023.
Please note that the rates here are for information only, that they may vary without notice, and that no guarantee is offered. To know the current rates at the time of your search, speak with a partner mortgage broker by filling out our free form.
**For illustration purposes only. No rate guarantee. Get current rates by filling out our short online form.
While rates are low, now could be a good time to take action and buy your next property.
The first step in any buying project, however, is to know how much you can afford.
A mortgage broker can assess your borrowing capacity (the maximum amount of mortgage that the banks will agree to lend you).
For example, your mortgage broker can tell you if you can afford:
Borrowing capacity calculations are based on your income and your debt. It is the ABD and ATD ratios that are used in the calculation of a client’s borrowing capacity.
To know YOUR maximum borrowing capacity, complete the free form on this page.
As you can see from the previous rate table, mortgage rates are quite high and competitive.
It’s definitely a good time to shop around and book your rate for 2023 because the slightest difference in rates can save a fortune.
Did you know that you can reserve and hold a mortgage rate up to 4 months before your planned purchase or renewal?
In fact, you can get pre-approved up to 120 days before closing a transaction.
So don’t wait until the last minute to shop. Instead, compare rates with an expert in advance and book the best deal available!
You just have to use the free form on this page and a professional partner broker will take care of your account, free of charge.