Date: August 27, 2023

Category: Newsletter

As we approach September, the shift towards the end of summer and students returning to school is a familiar rhythm. However, this year, we face September with a sense of anticipation as we await the Bank of Canada’s decision on September 6.

Reflecting on the past month, it seems both eventful and uneventful in its own way. Let’s take a moment to recap.

Inflation: We were surprised to see an increase in the inflation numbers last month, creating some volatility, which may include further interest rate increases later this year. The rise in inflation has prompted a surge in bond yields, causing the benchmark 5-year yield to soar to new highs not seen in 16 years, reaching 4.15%. Consequently, this contributes to the prevailing higher rates for 5-year fixed mortgages. 

Rates: We’re currently navigating a period of volatile rates where the variable rate surpasses the fixed rate. This inversion brings uncertainty. Experts suggest a potential 0.25% increase before year-end.

 Here are a few factors to consider: 

Prepare for Rate Fluctuations: If you are in a variable rate, it seems certain that the rate increases have yet to end, so you have some decisions to make. Stay the course, lock in or move lenders. This is the time to prepare for potential further rate increases in the short term. If you are in a fixed-rate mortgage, make those extra payments to help yourself get ahead while your rate is still lower than the current rates.

Consider Long-Term Planning: A majority of homeowners are favouring 3-4 year term mortgages during renewals, reflecting the expectation of prolonged rate increases before any decline. This is partly due to the information we are being provided that suggests we will be in this rate-increasing environment for a bit longer before we see rates trickle back down. The 1-2-year terms were popular earlier this year. However, many now believe this is too short of a period. 

It’s important to recognize that each person’s financial situation is unique. Over the past few weeks, I’ve had conversations with clients considering refinancing back to 25-30-year amortizations to manage payments. Remember, this isn’t a sign of defeat but rather a strategic adjustment. This flexibility allows for course corrections while navigating the evolving economic landscape.

Here are my two cents to those clients: 

  • You may have to realign your amortization to reflect today’s current rate-increasing world we find ourselves in, but you need to look at things long-term. 
  • There’s nothing wrong with extending to a 25- or 30-year amortization. This is not defeat; it’s a strategic move. 
  • Understanding you have this ability is the first win! You have a home, likely with lots of equity. 
  • This home will continue to increase in value while you course correct to adjust to today’s challenges. 
  • If you take a longer amortization to combat the currently higher payments, you can still course correct again in the opposite direction once rates decrease. 
  • Think of this as the long game. You don’t need to win every round to win the game.  

Real Estate Market: While I’m not a real estate expert, what I do daily puts me in touch with what’s happening with home prices and how that affects home buyers. It may seem grim for homebuyers right now with little inventory; however, new listings in Canada have climbed 21% since April. This is the fastest three-month increase recorded outside the pandemic. Does this solve all our problems with housing availability and affordability? Not even close, but it does suggest a possible shift coming.  

Mortgage Delinquencies remain low but did tick up slightly in the second quarter. Given rising interest rates and the possibility of an economic slowdown later this year, it’s imperative we connect with you before you miss a mortgage payment. Once you miss a mortgage payment, it becomes more difficult to find a solution. A small percentage of clients need to hear this, and if you find yourself in this category, I urge you to connect and don’t feel bad…life happens, and we all need help at one time or another. We are here to support you – no judging! I’ve been there!

What’s Next?  We have three Bank Of Canada announcement dates to make it through this year.

  • Wednesday, September 6
  • Wednesday, October 25
  • Wednesday, December 6

Experts predict a 4% overnight rate by the end of 2025 (currently, we are at 5%), implying 5-year fixed rates would still be in the mid-5% range for two and a half years; I’m not making any predictions; however, this seems unlikely since once the economy shifts gears and inflation cools, we should see rapid rate cuts in big chunks. Interest rates tend to take the stairs up and the elevator back down. One can hope that still holds true.

That’s a lot to digest, so if you want to discuss further, connect with me by clicking this link. Let’s review your situation and prepare today for tomorrow. 

Mortgages can be complicated; we are here to help you make “cents” of it.

We focus on Mortgage Solutions, Period!

To learn more connect with Ana Cruz 905.870.0513 or email at