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When We'll See Rates Come Down

Yesterday morning there were no surprises as the inflation reports for Canada depicted a similar scene to the US reports released last week. The reports show the rate of inflation (3.1%) is still slowly coming down from its peaks in the summer of 2022. This brings us closer to the Bank of Canada’s (BoC) target inflation range (1% - 3% year over year).


From a mortgage holder perspective, this is good news. Combined with a technical recession and increasing unemployment figures, it helps build a better case for the BoC to reduce rates. Assuming that's what happens here, the next guess is how far and how fast will those rates drop?


Currently, the market is pricing in a 76% chance of a rate cut by March 2024. Keep in mind these odds change almost daily depending on what is going on in the markets and global economy. 


If we look at the last four rate cycles, when rates drop, they drop significantly and quickly:

Fixed rates also have space to potentially drop due to bond yields decreasing from their highs in October. We've seen a number of lenders slightly dropping rates over the last couple of weeks. If this bond yield trend continues, we expect significant cuts to come.

Now is a great time to take stock of your financial situation. Where are your weaknesses? What sort of problem could put you on the ropes? How will these economic changes affect your family’s circumstances? 


We work hand-in-hand with a number of professionals who share our values in helping guide clients through their options. Our goal is to always figure out how to keep you and your family in as positive of a situation as possible. If you think you could benefit from the assistance of an independent financial advisor, accountant, or insurance broker, we would be happy to connect you with someone to grow your financial team.


This cycle of rate increases is hopefully behind us as we enter a new stage of economic development and uncertainty. While this is great news for mortgage interest rates, this also foreshadows difficulty to come in the form of economic recession. We aim to always provide clients with valuable information and insight especially when times are difficult to decipher. If you have any questions about how these latest developments and figures could impact you, please reach out.

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