Bank of Canada Summary January 2023
As the market predicted, the Bank of Canada has continued their quantitative tightening increasing the overnight rate by 25 basis points. While this is not good news for variable products, the silver lining is that the market is predicting a pause to further hikes in the near-term.
Specific to Variable and Adjustable-Rate Mortgages, Prime will increase to 6.70%.
Inflation in Canada remains an ongoing concern, despite having decreased from its peak. As interest rates continue to impact the economy, there are signs of improvement on the horizon. For example, declining energy prices and more efficient supply chains are projected to bring inflation down to around 3% by the middle of 2023. This trend is expected to continue, with inflation reaching the target rate of 2% in 2024.
Further summary of today’s announcement (click full announcement here):
- Global inflation remains high, but is coming down in many countries due to lower energy prices and improvements in global supply chains.
- The Canadian economy has grown stronger than expected and remains in excess demand, with tight labor markets and businesses reporting difficulty finding workers.
- Restrictive monetary policy is slowing activity in Canada, especially in household spending and housing market activity.
- The Bank of Canada expects inflation to come down significantly this year, and is prepared to increase interest rates further if needed to return inflation to the 2% target.
In today's mortgage landscape, it is important to review all available options and opportunities:
Payment Concerns?
One potential solution is to refinance your existing mortgage, as this will provide equity to apply to higher interest unsecured debt. Reducing payments can free up cash flow, allowing for extra payments to be made towards mortgage principal, increasing interest savings.
Another option with a refinance is to extend your existing amortization, reducing your overall monthly outlay.
Mortgage Renewing?
For those with mortgages set to renew in 2023, it is recommended to review and evaluate one's options with a mortgage Broker. As all banks are aggressively competing for new mortgage business, contact a Nest Mortgage Broker with access to over 200+ lenders and thousands of mortgage products to help source the absolute best mortgage available (at no cost to the borrower!).
Purchasing or Investing?
As the housing market slows and home prices adjust, you may consider purchasing a property at a lower price with a flexible term (variable or 1-2 year term). Leaving your options open to capture a lower rate 12-18 months from now may be a viable strategy.
Reach out to info@nestmortgage.co as we would be happy to review your mortgage needs!




