Bank of Canada Rate Announcement & the State of Mortgage Market

Finally a pause…the Bank of Canada decided to leave rates unchanged for the first time in 12 months.  Prime rate is staying at 6.70%.

There was zero growth in our economy in Q4 and inflation has gone down a little bit more, hence the pause.  The next BoC meeting is happening on April 12.  

In the meantime, what’s the forecast from the Big Banks regarding Prime Rates? It’s a mixed bag of opinion. Projections range from Prime rate dropping by 0.50% by end of the year to staying flat. For 2024, projections range from Prime rate dropping by 1% to 2.25%. Of course, these projections can change overnight subject to the latest economic data.

On another note, the latest data from Mortgage Professionals Canada’s 2022 Year-End Consumer Survey reveals the following valuable insight into the current mindset of Canadian Homeowners.

45% of Mortgage holders who voluntarily took action to shorten their amortization periods 

• 19% made lump sum payment
• 18% increased the amount of their payment (average amount was $583/mo)
• 8% increased payment frequency

75% of Canadians have not considered refinancing their mortgage. It’s possible that it didn’t even occur to them that they could. 

Homeowners who took equity out of their homes in the past year used the funds for the following purpose:

• 36% For home renovation and repair (Average spend on renovation was $41,748)
• 32% For debt consolidation
• 21% For investments
• 23% For purchases
• 9% To gift or lend to family members

Here are the top reasons why Borrowers used a Mortgage Broker

• 59% To get the best rate
• 39% To get multiple quotes
• 33% To help me understand my options and process
• 25% So I didn’t have to do the research and investigation myself
• 25% For better customer service 
• 20% To provide me with recommendations on which lender to deal with
• 18% Because the broker was open and upfront with me
• 18% To provide me with recommendations on the mortgage terms I should get
• 17% Because the broker matched the product to my needs 

How can you use this information? If you’re a homeowner looking to optimize your mortgage payments and take advantage of equity takeout opportunities, we recommend taking the following steps. 

First, review your budget to see if you can increase your payment amount or frequency or make lump sum payments. 

Second, consider the different reasons why mortgage holders refinance and determine what specifically applies to you for taking advantage of your equity takeout opportunity. 

Finally, book a Quick Call with one of our licensed Mortgage Strategy Managers, who can help you execute these strategies and provide advice in your best interest. 

At Karista, we are committed to helping you achieve your financial goals and answering any questions or concerns you have about money, mortgage, and finance.

Please make sure you talk to us before making any financial decisions.