As the Canadian economy continues to recover from the effects of the COVID-19 pandemic, many homeowners and prospective buyers are wondering what the future holds for home interest rates in Canada in 2023.
While it is impossible to predict with certainty what will happen to interest rates in the coming years, there are several factors that are likely to influence their trajectory.
The Bank of Canada has indicated that it plans to keep its key interest rate at its current record low of 0.25% until at least 2023. This is in an effort to support economic growth and encourage borrowing and spending. This means that variable-rate mortgages, which are typically tied to the Bank of Canada’s key interest rate, are likely to remain low for the foreseeable future.
However, fixed-rate mortgages, which are tied to bond yields, could see some upward movement in 2023. Bond yields have been on the rise in recent months as investors become more optimistic about the economic recovery. If this trend continues, it could lead to an increase in fixed mortgage rates.
Additionally, inflation could also play a role in shaping interest rates in 2023. The Bank of Canada has indicated that it is willing to let inflation temporarily exceed its target of 2% in order to support the economic recovery. If inflation rises significantly, it could lead to an increase in interest rates as the Bank of Canada seeks to keep inflation under control.
Overall, it is difficult to predict exactly what will happen to home interest rates in Canada in 2023. However, it is likely that variable-rate mortgages will remain low, while fixed-rate mortgages could see some upward movement depending on bond yields and inflation levels. It’s always a good idea to stay informed about economic trends and to work with a trusted mortgage professional to help you navigate the ever-changing landscape of interest rates.