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HomeLatest NewsCanadian NewsMortgage Owners Alert: Insights on the BoC Rate Hold and Its Impact.

Mortgage Owners Alert: Insights on the BoC Rate Hold and Its Impact.

Mortgage Owners Alert

Experts predict that mortgage owners will be left with mixed feelings after the Bank of Canada opted to keep interest rates and imply that it is too early to decrease rates.

The Canadian central bank has decided to hold its key policy rate at 5% for the fifth consecutive meeting, despite Bank of Canada Governor Tiff Macklem stating it is too early to consider lowering the policy interest rate. Mortgage and real estate expert Victor Tran said the announcement was of “no surprise to Canadians.”

Alana Riley, head of insurance mortgages and banking solutions at IG Wealth Management, stated that the Canadian bank prime rate will remain at 7.2%. This decision has left mixed emotions among Canadians, as it will continue to pressure the cash flow of households with variable-rate mortgages, HELOCs, and unsecured lines of credit.

Canadian co-CEO James Laird predicts that rates will remain high until the central bank is confident in controlling inflation. He warns that those with variable rates or home equity lines of credit may be disappointed as there is no indication of when the first rate cut will occur.

Laird also notes that fixed-rate mortgage products are currently popular among consumers, with fewer people opting for variable rate products and prioritizing certainty and stability. He also predicts that shorter-term fixed products will remain popular ahead of potential rate cuts in the second half of the year.

Overdue mortgage payments

The Bank of Canada has decided to hold interest rates following data from Equifax Canada showing that consumers in Ontario and British Columbia have been increasingly missing mortgage payments in the fourth quarter of 2023.

Mortgage delinquency rates have surpassed pre-pandemic levels, with Ontario’s delinquency rate rising by 153.2% compared to the previous year and B.C.’s by 62.2%.

Daniel Vyner, principal broker at DV Capital, emphasized the impact of an elevated interest rate environment on homeowners, noting that while a hold may be better than an increase, the prolonged hold could have a significant impact, especially for those who budgeted or entered the market at lower interest rates.

Buyers are back in the market

The Bank of Canada’s interest rate decision has surprised Laird, who expressed surprise that the central bank did not comment on the strength of Canada’s real estate market so far this year.

According to Tran, real estate activity has been busy in Greater Toronto and Southern Ontario, with buyers returning to the market and bidding wars.

Tran also highlighted that interest surrounding a potential rate cut later this year has driven many prospective buyers to enter before the market becomes too busy. The market is almost back to a seller’s market, with 20 bids on certain properties.

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Mortgage Owners Alert Mortgage Owners Alert Mortgage Owners Alert Mortgage Owners Alert

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