National Bank of Canada Wins the Bank of Canada Rate forecast!
Early in 2024, National Bank had the most aggressive rate forecast, expecting the Bank of Canada to reduce the overnight lending rate 1.75% by the end of 2024.
Thanks to today’s rate announcement by the Bank of Canada, they were the only lender with the correct prediction.
Now, National Bank is continuing with their aggressive rate forecast and expects the Bank of Canada to decrease the overnight lending rate by an additional 1.25% in 2025, bring the overnight lending rate to 2.00% by the end of 2025.
If National Bank is able to accurately predict the Bank of Canada’s movements twice in a row, we could see the Prime Interest rate at 4.20% by the end of 2025.
RENEWALS & RATES
Variable Mortgage Rates
Currently, most lenders are providing borrowers with a discount off the Prime rate between 0.65% – 1.00%.
Lenders are beginning to reduce these discounts, and will likely continue as the Bank of Canada lowers the interest rate.
Fixed Rate
Bond yields decreased over the last 2-weeks back to lows reached in July/August of 2024.
As we enter 2025, we should see special rates on 3yr/4yr/5yr fixed conventional mortgages in the low 4% range.
5-yr Insured/Insurable mortgages will likely be priced at 3.89%-3.99%.
Ride-the-Rate-Down Strategy
A rate strategy gaining popularity on social media is opting for a variable-rate mortgage with a lender that allows you to lock-in to a fixed-rate mortgage without penalty.
In theory, this strategy will allow you to ride interest rates down and then lock-in to a fixed-rate mortgage when interest rates are at their lowest.
Before jumping on this strategy it is best to weigh the pros & cons.
Market Forecast
In the Greater Vancouver Region, sales activity has rebounded considerably since September.
October & November sales activity showed a significant increase in sales (+25%), and I expect December will post similar results.
A trend appears to be forming as we enter 2025.
I believe this is fueled by several factors:
- Lower interest rates, and expectation rates will go lower.
- Increased borrowing power for first-time home buyers
- Increased number of listings – more selection.
If you have any questions, or would like to explore your borrowing options, lets chat!
Adam Sale
778-215-4121