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The Latest in Canadian Mortgage Rates: What You Need to Know

As 2024 draws to a close, Canadian mortgage rates continue to be a hot topic for both prospective homebuyers and current homeowners. With the Bank of Canada maintaining its vigilant stance on inflation, the housing market has seen significant fluctuations in borrowing costs. Here’s an in-depth look at where mortgage rates stand today and what the future may hold.

Current State of Mortgage Rates in Canada

As of December 2024, the average five-year fixed mortgage rate in Canada hovers between 5.8% and 6.2%, depending on the lender and borrower’s qualifications. Variable rates, tied closely to the Bank of Canada’s policy interest rate, remain slightly lower, averaging 5.4% to 5.6%. However, many borrowers are leaning toward fixed rates, given the uncertainty surrounding future rate hikes.

The Bank of Canada’s overnight rate, which directly influences variable-rate mortgages and lines of credit, currently sits at 5.00%, following a series of rate hikes since early 2022. These increases were implemented to curb inflation, which has gradually been declining but remains above the central bank’s 2% target.

Key Factors Influencing Mortgage Rates

  1. Inflation Trends: The Bank of Canada continues to monitor inflation closely. While it has shown signs of easing, any uptick could prompt additional rate hikes.

  2. Global Economic Conditions: Economic uncertainties, such as fluctuating energy prices and geopolitical tensions, also impact Canada’s lending environment. These factors can indirectly affect mortgage rates.

  3. Housing Demand: Despite higher borrowing costs, housing demand in many urban centers remains robust. This demand can influence lenders to adjust their mortgage offerings competitively.

  4. Government Policies: Recent policy changes, including updates to the stress test rules and increased focus on affordable housing initiatives, may also affect mortgage accessibility and rates.

Should You Choose Fixed or Variable?

For many Canadians, the decision between fixed and variable rates is challenging. Here’s a quick comparison:

  • Fixed Rates: Offer stability, with predictable payments over the term of the mortgage. These are ideal for risk-averse borrowers who want certainty in their monthly budget.

  • Variable Rates: Historically, these have been cheaper over the long term. However, their payments fluctuate based on market conditions, making them riskier in today’s volatile rate environment.

Tips for Navigating the Mortgage Landscape

  1. Shop Around: Don’t settle for the first offer you receive. Mortgage brokers can help you compare rates from multiple lenders.

  2. Check Your Credit Score: A strong credit score can significantly improve your chances of securing a lower rate.

  3. Consider Pre-Approval: Locking in a rate with pre-approval can protect you from potential rate hikes while you search for a home.

  4. Explore Alternative Options: Some lenders offer hybrid mortgages or cashback incentives, which might be suitable depending on your financial goals.

Looking Ahead

While predicting the exact trajectory of mortgage rates is difficult, many experts anticipate a gradual stabilization in 2025 as inflationary pressures ease. For now, Canadians should remain informed and proactive, seeking advice from financial advisors to make well-informed decisions about their mortgage plans.

Final Thoughts

The Canadian mortgage landscape is undoubtedly complex, but staying updated on rate trends and understanding your financial situation can help you navigate it with confidence. Whether you’re renewing your mortgage, buying your first home, or exploring investment properties, careful planning will ensure you’re prepared for whatever lies ahead.

If you’re looking for personalized mortgage advice or want to explore the latest listings, don’t hesitate to contact Frank Rocco at 604-202-7205. Let’s make your real estate journey a success!

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Home buyer demand continues to strengthen in November

Home sales registered in the MLS® in the Metro Vancouver market rose 28 percent year-over-year in November, building on the momentum of the 30 percent year-over-year increase seen in October.

The Greater Vancouver REALTORS® (GVR) reports that residential sales in the region totalled 2,181 in November 2024, a 28.1 per cent increase from the 1,702 sales recorded in November 2023. This was 12.8 per cent below the 10-year seasonal average (2,500).

“When we saw demand pick up in October, there was still a question over whether it was a blip in the data or the start of an emerging trend,” Andrew Lis, GVR’s director of economics and data analytics said. “While the November market isn’t quite a Cyber Monday door-crasher, buyers are continuing to take advantage of the relatively balanced market conditions while they last.”

There were 3,725 detached, attached and apartment properties newly listed for sale on the Multiple Listing Service® (MLS®) in Metro Vancouver in November 2024. This represents a 10.6 per cent increase compared to the 3,369 properties listed in November 2023. This was 5.4 per cent above the 10-year seasonal average (3,535).

The total number of properties currently listed for sale on the MLS® system in Metro Vancouver is 13,245, a 21.2 per cent increase compared to November 2023 (10,931). This is 26.1 per cent above the 10-year seasonal average (10,502).

Across all detached, attached and apartment property types, the sales-to-active listings ratio for November 2024 is 17.1 per cent. By property type, the ratio is 12.7 per cent for detached homes, 23.1 per cent for attached, and 18.7 per cent for apartments.

Analysis of the historical data suggests downward pressure on home prices occurs when the ratio dips below 12 per cent for a sustained period, while home prices often experience upward pressure when it surpasses 20 per cent over several months.

“Although demand has increased as we head into year-end, the number of newly listed properties coming to market in November remained sufficient to keep prices steady across all segments,” Lis said. “But as we move into the New Year, if the strength in demand continues at the current pace, and the pace of newly listed properties coming to market doesn’t keep up, it may not be long until we see the return of upward pressure on prices.”

The MLS® Home Price Index composite benchmark price for all residential properties in Metro Vancouver is currently $1,172,100. This represents a 0.9 per cent decrease over November 2023 and nearly unchanged compared to October 2024.

Sales of detached homes in November 2024 reached 626, a 19.7 per cent increase from the 523 detached sales recorded in November 2023. The benchmark price for a detached home is $1,997,400. This represents a one per cent increase from November 2023 and a 0.3 per cent decrease compared to October 2024.

Sales of apartment homes reached 1,089 in November 2024, a 28.1 per cent increase compared to the 850 sales in November 2023. The benchmark price of an apartment home is $752,800. This represents a 1.2 per cent decrease from November 2023 and a 0.6 per cent decrease compared to October 2024.

Attached home sales in November 2024 totalled 451, a 42.7 per cent increase compared to the 316 sales in November 2023. The benchmark price of a townhouse is $1,117,600. This represents a 1.8 per cent increase from November 2023 and a 0.8 per cent increase compared to October 2024.

Download the November 2024 stats package

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Reciprocity Logo The data relating to real estate on this website comes in part from the MLS® Reciprocity program of either the Greater Vancouver REALTORS® (GVR), the Fraser Valley Real Estate Board (FVREB) or the Chilliwack and District Real Estate Board (CADREB). Real estate listings held by participating real estate firms are marked with the MLS® logo and detailed information about the listing includes the name of the listing agent. This representation is based in whole or part on data generated by either the GVR, the FVREB or the CADREB which assumes no responsibility for its accuracy. The materials contained on this page may not be reproduced without the express written consent of either the GVR, the FVREB or the CADREB.