In this fourth quarter of 2024, the mortgage market in Canada is marked by several key trends related to high interest rates and expectations of a slight recovery in the housing market.

After significant interest rate increases since 2022, economists anticipate a rate cut starting in mid-2024. By the end of the year, the Bank of Canada's key interest rate could fall to around 4%, leading to a gradual decline in fixed mortgage rates, which have already decreased slightly since October.

With this outlook, many borrowers are turning back to variable-rate mortgages, hoping to benefit from future rate decreases. Variable-rate mortgages are projected to account for more than 25% of new mortgages by the end of the year.

In terms of real estate, the market remains relatively stable, with slight price increases in some regions like Alberta, but little growth in more mature markets like Ontario. Nationally, house prices are expected to rise modestly, with forecasts ranging from +1,5% to +5% depending on the region.

However, homeownership remains a challenge due to high mortgage rates. Despite this, population growth and a housing shortage are supporting demand, particularly in the rental sector, where potential buyers are waiting for better conditions.

In summary, even though the current context of the mortgage market remains complex, forecasts of falling rates and stable property prices suggest a gradual improvement from 2024 onwards.

1

New legislation for first-time buyers in 2024

Two major changes concerning first-time buyers came into effect in 2024, offering additional options to facilitate homeownership:

  1. Starting August 1, 2024, all first-time homebuyers purchasing a new property, representing approximately 20% of home buyers in Canada, can now extend their mortgage term to 30 years, instead of the previous maximum of 25 years. This reduces monthly mortgage payments, providing greater flexibility for new homeowners, even if their down payment is less than 20%. This measure applies to mortgages insured by the Canada Mortgage and Housing Corporation (CMHC).
  2. From December 15, 2024, this option will be extended to all first-time buyers, whether they are purchasing a new property or not. This means that even buyers with a down payment of less than 20% will be able to benefit from a 30-year mortgage, making homeownership more accessible in a market where prices remain high.

These changes offer advantageous solutions for first-time buyers, who can thus better manage their finances and spread their payments over a longer period, making the purchase of a first home easier.

2

Current and future interest rates: Strategy to adopt

Interest rates in Canada have risen since 2022 to combat inflation, but cuts are expected starting in 2024. Borrowers should assess whether they want to opt for a fixed rate that offers stability, or a variable rate that could become advantageous if rates fall as expected.

3

Early repayment options: Reduce your interest

Some lenders offer flexible options that allow you to repay a portion of your mortgage each year without penalty, up to 20% of the principal. This can help reduce the overall interest paid over the life of your loan.

4

Transferable mortgage: Flexibility when moving

A transferable mortgage allows you to keep the current terms of your mortgage on a new property without having to pay penalties, which is ideal if you are planning to move before the end of your term.
5

All-in-one accounts: Maximize access to equity

Some lenders offer mortgages combined with a home equity line of credit, allowing you to access funds for projects like renovations or investments, while still maintaining a competitive mortgage product.

6

Shop around for your renewal: Don't automatically stay with your lender

Don't settle for automatic renewal from your lender. Take the time to compare offers from other institutions, as this could allow you to obtain better terms and rates.

7

Leveraging Equity: Refinancing Wisely

The equity you've built up in your home can be used to finance personal projects or investments. However, be sure to fully understand the implications before refinancing.

Yes, you can switch lenders at renewal time. This can often allow you to obtain better terms in terms of rates or flexibility. If you have any further questions or would like to explore the best options for your mortgage renewal, please don't hesitate to contact us. We're here to help you maximize your savings and make the best choices for your financial future.