September 2024 Interest Rate Announcement
The Bank of Canada (BoC) has again lowered its interest rates, marking the third cut in 2024. Overnight lending rates are now 4.25%, 25 basis points below the previous 4.5% rates, highlighting positive economic changes.
In its official statement, the Bank of Canada cited ongoing easing in inflationary pressures and excess supply in the economy as key factors influencing its decision to lower rates.
While some areas, such as shelter costs, are still contributing to inflation, overall price increases are moderating. Let’s explore what this means for 2024 mortgage rates in Canada.
Will Mortgage Rates Go Down in 2024?
With interest rates continuing to decrease, mortgages are becoming more accessible for people across Canada. Individuals with variable-rate mortgages can enjoy lower monthly payments, and it’s also a good time for first-time buyers to get on the property ladder.
While lower mortgage rates can make homes more affordable, economic changes might increase rates.
Best Ways to Take Advantage of a Lower Mortgage Interest Rate
Lower mortgage rates offer numerous advantages, and knowing how to take advantage of them means you can improve your financial future. Here are the best ways to leverage lower mortgage interest rates to your advantage.
1: Increase Your Monthly Payments
Lower interest rates are ideal if you want to pay off your mortgage and look forward to financial freedom in the future. Choosing to pay more each month can help you reduce your debt.
For example, if your previous mortgage was $1,300 but the lower rates mean it decreases to $1,000, continuing to pay the extra $300 means you’re paying off your principal amount.
2: Build Equity
Building equity is a great way to take advantage of lower interest rates if you’re willing to invest more money.
The more equity you own, the easier it is to access different financial products and improve your financial prospects.
3: Improve your property
Another great way to take advantage of lower interest rates is to use the money you save to make home improvements. This not only allows you to enjoy the property more, but it can also increase its value.
According to the Appraisal Institute of Canada, renovating your kitchen and bathroom offers the highest return on investment, and you can make a profit when you sell the property.
What Do Lower Interest Rates Mean for Mortgage Renewals?
Mortgage renewals can be challenging because you want to find a deal that aligns with your needs while saving money. Lower interest rates are particularly beneficial for renewals, as they give you the best possible chance of securing the best terms.
Reduced Monthly Payments
Lower interest rates at the time of mortgage renewal can lead to better monthly payments. This can free up funds for other projects, savings, and investments, improving your financial opportunities.
Remember, even keeping the same mortgage terms can lead to lower monthly payments, as the interest rates will still decrease.
Opportunity To Pay Down Principal
With lower interest rates, more of your monthly payment will go toward paying down your loan’s principal. You can build equity and own more of the property, which gives you more freedom.
If you decide to keep the same payments after renewing your mortgage, you can repay the outstanding balance sooner.
Improved Affordability
Mortgage renewals are an ideal time to determine whether you can afford an upgrade. Purchasing a new property or investing in a rental apartment can be wise, but high interest rates often make it difficult.
Taking advantage of the decrease can help you purchase your dream home or make investments that pay off in the future.
If you have questions about mortgage renewals, you can visit our complete guide to renewing your mortgage for FAQs.
Mortgage Rate Forecast for 2024-2025
Decreasing interest rates are finally making the property market more accessible, but what can we expect from the future? There’s no way to tell exactly, but the Bank of Canada has said it will continue to monitor the economic situation and inflation.
If things continue to stabilize and the government reaches its 2% target, we can expect further decreases in the future.
Book A Consultation For Your Victoria Mortgage
If you’re ready to invest in your first home or find a mortgage renewal deal that aligns with your goals, Prime Mortgage Works would love to support you.
We work with clients across British Columbia and ensure each has access to lower rates to secure the best mortgage.
Whether you’re a first-time buyer or it’s time to renew your mortgage, our helpful brokers have access to a vast network of BC lenders.
Please feel free to contact us with any questions, start your mortgage application, or book a consultation today.
