Breaking Mortgage News August 2024
August 7, 2024 | Posted by: Keith Leighton
Mortgage News August 2024
Recent developments in the mortgage market indicate several key trends and policy changes. These trends and policies are shaping the mortgage landscape in Canada, offering more options and potential savings for borrowers while addressing broader economic and housing challenges. Here's a summary of the latest Canadian mortgage news as of August 2024:
1. Interest Rate Cuts: The Bank of Canada has recently cut its overnight interest rate twice, bringing it down to 4.50% as of July 24, 2024. There are expectations for further cuts later in the year, depending on inflation trends and the decisions of the US Federal Reserve. These cuts are expected to provide some relief to homeowners with variable-rate mortgages, though the impact may be modest in the short term.
2. New Mortgage Policies: Starting August 1, 2024, the Canadian government has introduced 30-year amortizations for insured mortgages for first-time homebuyers purchasing new builds. This move aims to make homeownership more affordable for younger Canadians by lowering monthly mortgage payments and encouraging new construction.
3. Mortgage Rate Trends: Fixed mortgage rates are expected to gradually decrease throughout 2024 and into 2025. Current fixed rates are in the mid to high 4% range, but they may drop to the high 3% range by late 2025. Variable mortgage rates are also anticipated to decrease as the Bank of Canada continues to adjust its policies to stimulate economic growth and control inflation.
4. Market Conditions: Despite the cuts, mortgage borrowers are still facing high payments compared to pre-pandemic levels. The Bank of Canada predicts that average mortgage payments could increase by nearly 17% by 2027. Homeowners renewing fixed-rate mortgages will likely encounter higher rates than their initial terms, creating significant payment adjustments.
5. Economic Context: The Canadian economy has shown signs of slowing, with inflation easing to around 2.7% annually. The Bank of Canada is cautious about cutting rates too quickly to avoid re-inflation. The overall goal is to ensure stable economic growth and lower inflation before making further rate cuts.
These developments are part of broader efforts by the Canadian government and financial institutions to address housing affordability and economic stability in the face of fluctuating market conditions. Overall, the Canadian mortgage landscape is seeing significant changes aimed at easing financial pressures on borrowers, particularly first-time homebuyers. However, the long-term effectiveness of these measures in addressing housing affordability is yet to be fully assessed. Call your DLC Ideal Mortgage expert to learn more.
