Welcome News for Buyers & Mortgage Holders
The Bank of Canada announced a cut to the Key Rate of .25% at their September 4th Policy Meeting. More great news... financial markets are presently optimistic with some forecasters predicting that, if inflation continues to ease, the BoC may cut the Key Rate at each of the two meetings remaining in 2024.
On August 20th, Stats Can reported that inflation had continued to dip. July inflation dropped to 0.2% month-over-month, translating to 2.5% year-over-year. Great news for interest rate watchers as more signals are lining up with Bank of Canada projections.
This reflects U.S. pundit predictions that U.S. interest rates will likely be trimmed by the U.S. Federal Reserve on September 18th and it could even be as much as a half-a-percentage point cut. U.S. financial markets have experienced a tumultuous few weeks after U.S. labour statistics showed that job creation was down and unemployment was on the rise.
If cuts proceed as projected, economists here foresee that interest rates could land at 3.75% by the end of 2024, down from the current 4.25%. Plus, if the economy trends on the cooler side, economists expect there could be an additional .5% trim in the first months of next year and the Key Rate could be as low as 2.5% by the end of 2025.
Supporting this view is that Canadian housing markets and job creation didn’t catch fire after the previous two cuts. Right now, there’s a lot of speculation as economists weigh how the BoC will interpret data over the next few months in balance with the perspective of the coming wave of mortgage renewals in 2025.
By all forecasts, the coming 12 months will see sizable interest rate shifts.
What's it mean to a Mortgage Holder? Monthly Savings!
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