November 16, 2023 CMSpeople

2024 Mortgage Rate Forecast

Questions of hope… and for some, desperation.

Are mortgage rates going to drop in 2024? Will the Bank of Canada continue with quantitative tightening, or begin with ever-so-needed easing once again?

On October 25th, 2023, the Bank of Canada held its rate steady, for the second time in a row. While a pause by the BOC is better than a hike on any day, the media spun the narrative as “the BOC continues with quantitative tightening”. While this is one true perspective, it can also be seen as a relief for many Canadian homeowners. Following 10 consecutive interest rate increases since March 2022, totaling 4.75%, it’s not hard to believe that some Canadians are only 1 interest rate hike away from their financial breaking point.

Though a long, treacherous 18 months of seeing our household income thin out, it’s possible that we are at the peak of the rate-tightening cycle. With new data available, there are no doubts that household budgets have tightened (less consumer spending, decreased demand for housing, increased dependency on food banks, and many sadder, but expected metrics).

The lag effect of monetary policy is now evident in the numbers, and with that brings a slower, more measurable strategy of how to cool the economy without causing a financial crisis (although some might argue that this is undoubtedly a financial crisis – either one not yet being acknowledged or one being denied).

The light at the end of the interest rate tunnel…

With trends pointing to an economic slowdown and more pessimism toward the idea of a financial crisis, economists are now predicting that rates remaining at their current levels are detrimental to Canada’s economy. A policy rate decrease is being priced in as a necessary measure for 2024 – expected to begin between the end of Q1 2024 to mid-2024. When these rate decreases begin to roll out, all variable-rate debt will see immediate relief (variable-rate mortgages, business debt, lines of credit, etc.).

Like a catchy jingle, it’s hard to get the sound of “Rates will remain higher, for longer” out of our heads. We think it’s fair to assume that the BOC is reminding Canadians that Pandemic level rates (sub 2.00% level rates) are unlikely to be seen again and that we should reset our expectations to rates that fall within a historically neutral level or 3.00% – 4.00% (a healthy range). After all, money is more about behavior than it is about finance – and the BOC is ultimately manipulating our behavior with our money through quantitative tightening.

Will we see a rate hike on December 6?

Short answer – not likely. But don’t be surprised if the BOC sends out yet another reminder that future rate hikes are not off the table.


Stay tuned for more. In the meantime, we’re ready to take your call and answer your questions. (905) 455-5005.

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