The Bank of Canada maintains its current interest rates on October 25, 2023

  Hello,  On October 25, 2023, the Bank of Canada made an announcement stating their decision to keep the interest rates unchanged for the time being. As predicted in Perch's interest rate forecast, this decision was influenced by the decrease in inflation and the weakening state of the economy. The current overnight rate remains steady at 5.00%.   Here are the key takeaways from the latest interest rate announcement by the Bank of Canada: The Bank of Canada has decided to maintain their policy interest rate at 5.00%. The next interest rate announcement is scheduled for Wednesday, December 6, 2023. According to Perch's October mortgage outlook, fixed rates are expected to increase this month, with variable rates likely to follow suit. If you have questions about how this announcement might impact your mortgage payment or upcoming renewal, it's advisable to consult with an experienced mortgage advisor. We can make some recommendations to a great team of brokers. For more insights, you can read more from Perch CEO Alex Leduc in the Financial Post.   What kind of impact is expected on the mortgage market as a result of the Bank of Canada's latest interest rate announcement? Perch stated that The Bank of Canada made their most recent interest rate announcement on October 25. In response to reports of slowing inflation and an economy that seems to be stagnating, the Bank of Canada has chosen to maintain interest rates at a steady level for October. This marks the second time recently that the bank has paused rate hikes, with the previous pause occurring in January to evaluate the impact of previous interest rate increases. The current policy interest rate remains unchanged at 5.00%. Although the pause in rate hikes may indicate that the central bank believes we are nearing the end of the current inflationary period, recent data suggests that the Bank of Canada is more likely to raise interest rates again in the future. Presently, variable mortgage rates continue to be higher than fixed mortgage rates. While rates may experience short-term increases, mortgage lenders are factoring in the likelihood of rates decreasing within the next 5 years. This explains why variable rates remain higher than fixed rates. According to Perch's October mortgage rate outlook, they anticipate that mortgage rates will trend towards 5% in the long term. The chart below illustrates how their 5-year variable rate forecast has evolved over time based on the Bank of Canada's interest rate announcements.     Perch announced that The Bank of Canada's main priority is to bring inflation back to the targeted 2%. It is expected that the bank will start reducing interest rates towards the end of 2024 and into 2025. As a result, adjustable rate mortgage holders can anticipate lower payments during the upcoming years.   Purchasing a property now allows you to secure a lower purchase price in today's market, which is advantageous in the long term. To put it simply, your mortgage payment may change over time, but the purchase price will remain constant.   Many new buyers are choosing shorter mortgage terms with higher amortization in order to reduce their monthly payments. This strategy helps them potentially renew at a lower interest rate in a few years and ultimately pay off their mortgage sooner by accelerating the amortization period.   How will the most recent Bank of Canada interest rate announcement impact the prices of homes? Perch says In 2023, home prices in Canada experienced declines across the country, bringing them closer to their pre-pandemic levels in certain cities. Despite recent rate hikes, analysts predict a potential policy reversal from the Bank of Canada in the future, which could lead to price increases. It is expected that when interest rates start to decrease again, prices will quickly rebound to their previous highs and potentially surpass them. Based on their analysis, it seems that property prices hit their lowest point earlier this year, and they anticipate seeing increases in the second half of 2023 and into 2024. As of September, the current home price index in Canada showed a modest 0.4% month-over-month rise. According to the Toronto Regional Real Estate Board, high interest rates and uncertain economic conditions have contributed to a slowdown in the market. However, population growth is expected to drive continued price increases in the future. While borrowers may need to wait for at least a year to see lower rates, it's worth noting that housing prices in major cities have already begun to recover from their earlier lows this year. Therefore, the upcoming months present a favorable opportunity for prospective buyers, and those considering purchasing a property should seriously consider doing so sooner rather than later.   What can we expect in terms of mortgage rates for the year 2024? As per financial projections formulated by Alex Leduc, Principal Broker at Perch, there is an anticipation of a gradual decline in 5-year variable mortgage rates towards the end of 2024.     Will mortgage rates raise in the next 5 years? According to Perch's latest Mortgage Rate Outlook, they anticipate a decline in 5-year variable mortgage rates during 2024 and this trend is expected to continue into 2025. They will be revising their mortgage rate forecast after each Bank of Canada interest rate announcement.     What is the current Bank of Canada interest rate today? The latest interest rate set by the Bank of Canada is 5.00%, following an increase of 0.25% announced on July 12, 2023.     When is the next Bank of Canada interest rate announcement? The next scheduled Bank of Canada interest rate announcement is Wednesday, December 6, 2023 at 10:00 AM ET.      What are the remaining interest rate announcement dates in 2023?   There are a total of 8 Bank of Canada interest rate announcements each year. The remaining dates for 2023 are as follows: Wednesday, December 6, 2023 The Bank of Canada typically makes their interest announcement at 10:00 AM Eastern Time.     All information in this email is sourced from Perch.io's website at https://myperch.io/home/?utm_source=datawrapper&utm_medium=chart&utm_campaign=overnight. Please view their website as a trusted source of the current rate and BOC information. Reach out to us if you would like us to connect you with an agent from Perch to get you more information or start the process of getting qualified for a mortgage. 

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