Canada’s mortgage market is bracing for more turbulence as interest rate expectations shift yet again. While this week’s business headlines buzzed with optimism over rising tech stocks like Zscaler, homeowners can’t help but wonder: what does that mean for me and my mortgage? At Unrate, we’re keeping a close eye on these economic signals because they often feed into decisions made at the Bank of Canada — and those decisions impact your housing costs directly.
Another Pause from the Bank of Canada?
At the heart of today’s uncertainty is the Bank of Canada’s next move on interest rates. After holding the key overnight rate at 5% for multiple consecutive announcements, many hoped we’d see a cut heading into spring. But that hope is now on shaky ground due to persistent inflation and a resilient labour market.
According to Statistics Canada, the inflation rate in March landed at 2.9% — still above the BoC’s 2% target. That makes rate cuts less likely in the near term. When interest rates remain high, mortgage rates tend to follow suit. This has kept many potential buyers on the sidelines, waiting for better borrowing conditions.
Homeowners coming up for renewal feel the pain most immediately. For example, someone rolling off a 5-year fixed rate from 2019 might see their renewal jump from 2.59% to well over 5.5%. That could mean hundreds more each month in housing payments. Now more than ever, reviewing your refinancing options is smart strategy — not luxury.
Home Prices Hold Steady — For Now
Despite higher borrowing costs, Canada’s housing market has shown remarkable staying power. The Canadian Real Estate Association (CREA) recently reported that the national average home price was $719,000 in April. That’s up 1.6% year-over-year, defying the correction many analysts expected.
That stability might not last. The volume of listings is increasing in major urban centres like Toronto and Vancouver. Combine that with smaller pools of qualified buyers, and prices could come under pressure this summer. If you’re wondering whether to list your home or stay put, it might be worth reviewing your repayment options to see where you stand.
Buyers with secure financing — especially those using a fixed-rate mortgage — might find deals if sellers grow more motivated. But caution is key. We recommend using our mortgage calculator to model different scenarios before making a move.
Borrowers Explore Hybrid and Alternative Lending
With traditional borrowing costs still near decade-highs, more Canadians are stepping outside of the box. One trend we’re seeing at Unrate is increased interest in hybrid solutions — combinations of fixed and variable rates — or tapping into home equity via a HELOC.
These strategies can offer flexibility, but they come with risk. Variable rates, while lower upfront, could rise if the BoC surprises markets later this year. Choosing between a variable rate mortgage and a fixed product has never been so complicated — that’s where working with a broker comes in handy.
We’re also helping clients evaluate private mortgage lenders, especially for borrowers declined by traditional banks. These aren’t always long-term solutions, but they can serve as a bridge — especially for self-employed Canadians or those with lower credit scores.
The Silver Lining for Older Homeowners
For Canadians aged 55 and up, the high-interest environment opens up another option: unlocking home equity through a reverse mortgage. This product lets you access tax-free cash from your home without selling or taking on monthly payments.
With property values still strong in much of the country, a reverse mortgage can be a strategic tool for supplementing retirement income or handling major expenses, like helping kids with their down payment. However, it’s crucial to understand the long-term implications — equity erosion over time, for example — before moving forward.
Still, for many, it’s a way to stay put in their family home while addressing their financial needs. It’s one of several non-traditional routes Canadians are considering in what is undeniably one of the trickiest mortgage climates in recent memory.
Conclusion: Adapt, Plan, and Review
While stock market gains like Zscaler’s may signal broader economic resilience, they don’t translate into lower mortgage costs — at least, not immediately. For Canadian homeowners aged 30 to 55, the bigger question is how to adapt in a higher-rate environment that may linger through the rest of 2024.
Start by reviewing your options: whether that’s a better mortgage rate, a more manageable term, or a shift in equity strategy. There’s no one-size-fits-all approach, but there is a smarter path forward—and we’re here to help you find it.
At Unrate, we work closely with homeowners across Canada to match your mortgage to your life, not the other way around. Reach out today for clear, honest advice on your next move.
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