Mortgage Rate Predictions 2023

December 28, 2022 | Posted by: Ron Chan

Mortgage Rate Predictions 2023

We’re at the precipice of the new year, and a number of Winnipeg residents have big plans for the annum ahead. Some of you intend to buy/invest in a new home, but are wondering what’s to come with respect to the cost of borrowing. You’re online and searching mortgage rate predictions 2023 to see if you should act fast or wait for a few months to pass before getting pre-approved on a mortgage. Below is a breakdown of these predictions to assist with your ultimate decision. Let’s review!

Predictions Regarding the Canadian Economy and How They Will Impact Winnipeg Variable and Fixed Mortgage Rates Early in 2023

The Bank of Canada Will Raise the Prime Rate Once More, Then Do Nothing

While many speculated that the Bank of Canada would cease their succession of prime rate increases with the end of 2022, we don’t think that they’re ready to quite yet. This is because the level of inflation isn’t coming down where it needs to be, leading Trudeau to bleakly exclaim that the country is in for a tough year as far as the price of goods and services are concerned. As a result, we predict that the Bank of Canada will raise the prime rate by .25 percent to a cap of 4.5% in their next Q1 announcement. For Q2, we predict it to flatline. We can’t see it going above the 4.5% mark. It hasn’t been that high since before the 2008 recession. If Trudeau is correct in his own prediction that Canada is in for a mild recession, the prime rate will likely plateau, or possibly fall as it did when the markets crashed in 2008. The former (plateau) is the most likely scenario.

What does this mean as far as mortgage rate predictions are concerned? Given that variable mortgage rates move in the same direction as the prime rate, you can expect those to also plateau.

Fixed Rates Will Drop in Q1

Canadian bond yields, like U.S. bond yields, have been tumbling down since October as investors anticipated that the tightening cycle is nearing an end. As bond yields fall, lenders cut fixed mortgage rates. The drop was negligible to say the most in Q4 of 2022, so expect a more noticeable improvement (for buyers) in 2023. However, if the tightening cycle persists into Q2 of 2023, the reverse may be true. If you prefer the comforts of a fixed rate mortgage, it’s best to lock in right away. View more on when to lock into a fixed mortgage rate, and how to lock into a fixed mortgage rate.

Whether you prefer variable or fixed mortgage rates, it’s important to partner with a mortgage broker. A reputable broker can get you access to lower unadvertised rates so that you pay less for your mortgage than those who go without the assist of a broker. It really is that simple. If buying a home in the Winnipeg area, contact mortgage specialist Ron Chan today to discuss your goals for the year ahead.

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