The next Bank of Canada interest Rate announcement will take place on September 6th 2023 at 10:00am ET. During the last interest rate announcement on July 12th, the Bank of Canada increased their policy interest rate by 0.25%.
The current overnight rate now sits at 5.00%.
Key Takeaways
- The Bank of Canada will be making their next interest rate announcement on September 6th at 10:00am.
- We predict fixed rates will increase in September, with variable rates remaining steady.
- Today’s best mortgage rates are 5.44% for 5-year fixed and 5.95% for 5-year variable.
How will the latest Bank of Canada interest rate announcement affect mortgage rates?
The Bank of Canada hiked interest rates by another 0.25 basis points in July, bringing the key rate to 5.00%.
Recent data has shown that inflation is slowing and the CPI is getting closer and closer to the Bank of Canada’s target, leading to some analysts predicting that the Bank of Canada might hold off on further rate hikes for the time being. After a 25bps increase in January the Bank of Canada paused rates to evaluate the effect that hikes were having on inflation, and then resumed tightening monetary policy with another 25bps hike in June. This pause indicates the Bank of Canada think the effect of their rate hikes may be getting close to bringing inflation back in line to their target of 2.00%. The next interest rate announcement from the Bank of Canada is on September 6. Whether the Bank of Canada decides to hold rates at their current level or increase the policy interest rate one more time, it’s seeming more likely that we’re nearing the end of rate hikes in the short term as CPI continues to slow.
As of today, variable mortgage rates are still higher than fixed mortgage rates. With inflation showing signs of returning to normal, mortgage lenders including the banks, are pricing in that rates are likely to go lower within the next 5 years.
The unemployment rate is on the rise, reaching 5.5% in July, indicating the economy is slowing as the Bank of Canada hoped.
As of our August mortgage rate outlook, we predict that in the long term mortgage rates will trend towards 4%. In the chart below, you can see how our 5-year variable rate forecast has changed over time based on the Bank of Canada interest rate announcements.
The current focus for the Bank of Canada is bringing inflation back in line with the targeted 2%. The Bank of Canada is anticipated to cut rates by 2% over 2024 and another 1% over 2025. Adjustable rate mortgage holders will see lower payments. In the short term, we're predicting the Bank of Canada will hold rates steady to the end of 2023.
How will the latest Bank of Canada interest rate announcement affect home prices?
2022 saw declines in home prices across the board in Canada, bringing prices closer to their pre-pandemic levels in some cities. With analysts across the board predicting an eventual policy reversal on the horizon from the Bank of Canada, the market might not stay low for long. If rates start to come back down, it's likely prices will quickly rebound to their prior highs and beyond.
Buyers are coming back and the real estate market is seeing more activity following expectations that rates will hold steady for the short term. We believe that property prices have hit their bottom earlier this year and we'll continue to see increases in property prices in the second half of 2023 and into 2024.
In May alone, the average Toronto home price was up 3.50% according to the Toronto Regional Real Estate Board.
Borrowers won't see lower rates for at least 1 year, but housing prices in major cities have already started to recover from their lows earlier this year. The next few months will be a very opportune time to buy and anyone on the sidelines should seriously consider executing now before the window of opportunity closes.
Where will mortgage rates be in 2024?
According to financial models by Alex Leduc, Principal Broker at Perch, 5-year variable mortgage rates should start dropping in early 2024.
Will mortgage rates go up in the next 5 years?
Based on our latest Mortgage Rate Outlook, expect 5-year variable mortgage rates to start dropping in 2024 and continue doing so into 2025. We'll be updating our mortgage rate forecast after every Bank of Canada interest rate announcement – you can subscribe to our mortgage rate forecast for free.
What is the Bank of Canada interest rate today?
The current Bank of Canada interest rate sits at 5.00%, with a 0.25% rate hike 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, September 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, September 6, 2023
- Wednesday, October 25, 2023
- Wednesday, December 6, 2023
The Bank of Canada typically makes their interest announcement at 10:00 AM Eastern Time.
Here's what else we're reading:
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This post first appeared on Mortgage Resources For Canadian Home Buyers And Homeowners, please read the originial post: here
