Canadian Housing Market Struggles Amid Bank of Canada Rate Hikes

With 44% of mortgages up for renewal, experts recommend short-term fixed rates for stability. Compare options online for potential savings.

The Canadian housing market is facing a significant challenge as the Bank of Canada continues its historic rate hike cycle. With 44 per cent of all mortgages up for renewal in the next year-and-a-half, many households are feeling the strain of increased borrowing costs. The key interest rate, which was at 1.74% in May 2019, dropped to .25% during the pandemic but has now risen to 5.00%, causing financial stress for many mortgage consumers.

According to experts, a short-term fixed mortgage is currently the best choice for most borrowers, with 59 per cent of brokers recommending this option. With uncertainty surrounding future interest rate changes, locking in a short-term fixed rate may provide stability in the current economic climate. However, it is important to note that banks may not always offer their lowest possible rate at renewal, so negotiating with them could result in a better deal.

For those with variable mortgages, experts suggest waiting to see if interest rates will decrease before considering locking in a fixed rate. The CMHC is forecasting a reduction in interest rates, but they are still expected to be significantly higher than before. When shopping for the best mortgage rates, it is recommended to compare options online and consider shorter-term options for potential long-term savings.

Navigating the current Canadian mortgage market requires careful consideration and research to find the best option for your financial situation. By staying informed and exploring different mortgage products, borrowers can make informed decisions to secure their financial future.