As 2024 draws to a close, Canadian homeowners and buyers alike are closing the year with a mix of relief and concern. Interest rates have dominated the housing conversation for the past 18 months, and with new political and economic shifts on the horizon, many are wondering what it all means for mortgage strategies heading into 2025.
At Unrate.ca, we follow the housing economy closely so you don’t have to. This year has seen aggressive rate hikes, political tensions ripple through financial markets, and a stubborn inflation rate that feels impossible to box in. Let’s take a look at what’s happening behind the headlines and what it could mean for your home and mortgage in the coming months.
Inflation is Cooling, But the Bank of Canada Isn’t in a Rush
Canada’s annual inflation rate rose 3.1% in November, down from its peak but still far from the Bank of Canada’s 2% target. Economists had hoped we’d be closer to the finish line by now. However, shelter costs—including mortgage interest—continue to be a major driver of overall inflation, up nearly 6.7% compared to last year, according to Statistics Canada.
Despite the cooling trend, the Bank of Canada left its benchmark rate untouched at its last announcement in December. This leaves the overnight rate at 5%, its highest level since 2001. Many market watchers believe the Bank is hesitant to cut rates prematurely and risk reviving inflation. Their next move hinges heavily on labour market data and core inflation numbers in early 2025.
If you’re on a variable rate mortgage, you’ve likely been feeling the brunt of these hikes. For those considering a switch to a fixed option or looking to refinance, now is a critical time to weigh the numbers and get expert advice.
Home Prices: A Tale of Two Recovery Speeds
Depending on where you live, the housing market looks very different. Toronto and Vancouver continue to grapple with affordability concerns, while mid-sized markets like Halifax and Calgary show more resilience. According to the Canadian Real Estate Association (CREA), the national average home price in November was $646,134—relatively steady compared to the same month last year, but still below 2021 highs.
Sales volumes are soft, down 6% year-over-year nationally, which suggests buyers are still on the sidelines. High borrowing costs are a big deterrent, particularly for first-time buyers. Some industry analysts expect a spring rebound if rate cut expectations materialize, but it’s not guaranteed. Politics—both domestic and global—can quickly shake up that forecast.
This variable landscape makes mortgage planning more important than ever, especially if you’re looking at a second property or planning to upsize. Fixed rates may fluctuate, but there are signs they could edge down in anticipation of rate cuts in mid-2025.
Political Uncertainty Is Quietly Pressuring Markets
It’s not always front-page news, but political chatter—especially south of the border—is coloring economic forecasts. U.S. presidential primaries start in January, and markets are already pricing in the uncertainty. While Canada isn’t directly in the political firing line, we’re not immune to the volatility that follows election cycles in the U.S.
Closer to home, the federal government is being pressed to act more aggressively on housing supply. The fall economic statement included new incentives to speed up construction, but it will take time before these measures convert into meaningful supply boosts for buyers. More immediate relief might come from financial decisions at the municipal level, especially in fast-growing regions like Southwestern Ontario and Metro Vancouver.
Some homeowners may benefit from looking into a reverse mortgage or refinancing strategy to unlock equity while the market remains stabilized. With bond yields seesawing every week, a custom mortgage strategy is key—what works for your neighbour won’t always work for you.
Looking Ahead: What Should Homeowners Do Now?
If you’ve made it through 2024 with your home and finances intact, that’s already a win. But the new year brings new choices—and potential challenges. Economists are split on how quickly rate cuts will come, but most agree it’s unlikely before April or May.
In the meantime, mortgage holders should take stock of their current rate, renewal date, and household budget. Using a mortgage calculator to see how different interest rate scenarios could affect your payments is a great place to start. If your term is expiring in 2025, it may be worth locking in a competitive fixed rate before they creep lower—and possibly surge again if inflation rises unexpectedly.
For those struggling with tight cash flow, consider looking into your HELOC options or discussing payment flexibility with your lender. Canada’s mortgage market is more flexible than many people assume—there’s often a solution if you look with the right support.
The key takeaway? Don’t sit in uncertainty. Whether you’re renewing, buying, or just planning for the future, the right move starts with good information.
Final Thoughts
The headlines are dizzying, and interest rates are front and centre in the housing conversation. But under it all, the fundamentals still matter: smart planning, timing your decisions carefully, and getting guidance when you need it. Each household has a unique situation—and that means your mortgage strategy should be just as personalized.
If you’re unsure about your options heading into 2025, reach out to the Unrate team. We’re here to talk rates, strategies, and how to navigate the market with confidence.
Leave a Reply