Latest Mortgage Rate Outlook in Canada for October 2024

Mortgage Rates Prediction

For the month of October, we anticipate fixed rates will continue to decrease mildly and variable rates will drop following an expected 0.25% rate cut by the Bank of Canada on October 23rd.

Canada’s bond yields (which influence fixed mortgage rates) have continued to move downward as shown below (Source: Bank of Canada):

Bank of Canada rate announcement

We look at some of the core factors that the Bank is monitoring to gauge which direction they are likely to go. In this case, all indicators justify a cut, which makes it very likely.

• GDP Growth: The Bank of Canada is expecting GDP growth of 1.20% for 2024. Q1 and Q2 2024 came in at 1.8% and 2.1% respectively, implying the remainder of the year will be slower. (Source: Trading Economics)
• Inflation: Core inflation (year over year) in August slowed to 1.5% (vs 1.7% in July), now below the Bank’s 2% inflation target and showing signs of further weakness ahead. (Source: Trading Economics)
• Unemployment: A slight uptick to 6.6% in August (1.1% higher than 1 year ago), the Bank of Canada has signalled they think this is a good level as it indicates slack in the labour market and wage growth is not unreasonably high. (Source: Trading Economics)

Buyer Mortgage Balances Prediction

We believe that non-apartment/condo properties will experience flat price movements and apartment/condos prices in major markets will likely face lower prices until excess inventory is absorbed (great to article to read about this for Toronto here). This should lead to a lower mortgage balance and as a result lower mortgage payments.

In addition to this, recent regulatory changes to increase the insured limit from $1M to $1.5M should compound this trend by further reducing demand for condos. Our CEO, Alex Leduc, was recently interviewed in this article on the topic.

Home Prices

As a general rule of thumb, a sales to new listings ratio (SLR) above 60 is deemed a seller’s market, below 30 a buyer’s market and between the two a balanced market). In a seller’s market, prices are usually rising due to demand outstripping supply avaialble and in a buyer’s market prices are declining due to supply of new listings being greater than the demand from buyers.

Canada as a whole has moved into a balanced market as shown by CREA below with an SLR of around 53.

However, this is the National average and some cities have trended well below the average. For example, according to HouseSigma the Greater Toronto Area is a buyer’s market with an SLR of 21.

The SLR for condos is even worse (17), since there has been a flood of new inventory related to new projects hitting the market.

According to CREA, the National Composite MLS Home Price Index (HPI) was flat between July to August. The entire 2024 year-to-date has been fairly flat.