Bank of Canada’s Rate Pause, and Canadians Brace Themselves for Increased Mortgage Costs

This week’s top real estate stories.

By  Jared Lindzon | 2 minute read

Every Friday, Wahi brings you the most important real estate stories from the past week.

Welcoming The Return of the Sub-5%, 5-Year Fixed Rate 

The Bank of Canada held the overnight rate at 5% this week, but lenders are already lowering their five-year fixed mortgage rates to levels Canadians haven’t seen since the days of Chinese spy balloons and royal coronations. According to Canadian Mortgage Trends borrowers can now choose a condition-free five year fixed mortgage rate of below 5% for the first time since the spring, thanks to a falling 5-year bond yield. The site says multiple lenders have since dropped their rates to below 5%, which will go a long way in reducing mortgage renewal shock in the New Year.

The Mortgage Rate that Stole Christmas  

It’s shaping up to be a less than merry season for Canadian mortgage holders, many of whom are downsizing their holiday plans in anticipation of a major housing cost increase in the new year. That’s according to a new report by Desjardins, which highlights how bank deposits are up 40% this year while consumer spending remains below pre-pandemic levels. That suggests Canadians are squirrelling away their holiday funds for something else, and the most likely culprit is the anticipation of increasing mortgage costs. In fact, the report notes that Canadians could see a monthly mortgage increase of up to 70%.

Mortgage Holders Be Warned: Major Payment Increases Projected Through 2026

One of Canada’s biggest banks just offered a peek at the monsters under its mortgage portfolio bed, and borrowers are in for quite a fright. In its most recent earnings call BMO revealed that those who renewed mortgages this year saw an average increase of 21%, but that’s just the beginning. The 11% of borrowers that are up for renewal this year should expect an average increase of about 30%, and it gets worse. Most borrowers, according to BMO, are up for renewal in 2025 and 2026, and they’re looking at an average increase of 40%.   

Interest Rates Affecting Nearly Half of Ontarians’ Homebuying Plans

The game of musical chairs that is Ontario’s housing market may be on mute for a while. According to a recent survey, homebuyers are feeling stuck in their current situation, with 48% saying that high interest rates have impacted their decision to move or buy, and 17% delaying plans to purchase. In fact, 13% of those looking to upsize their living situation have since changed plans, and 10% no longer plan to own a home at all. Furthermore, 17% say that while buying was a good idea before interest rates started rising, they no longer believe that to be true.

November Was Another Slow Month in Toronto Real Estate  

Another month of elevated interest rates has come and gone, leaving us with even more data that Toronto’s housing market is slowing to a crawl. This week’s reinforcement of the obvious comes from the Toronto Regional Real Estate Board, which finds that, surprise surprise, sales are down, listings are up, and affordability is a distant memory. The latest report confirms that November was yet another quiet month in the GTA, with sales down 6% compared to last November, and listings up 16.5%, thanks to ongoing inflation challenges, elevated borrowing costs, and overall economic uncertainty. Prices, meanwhile, remained mostly flat.   

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