Mortgage Blog

Canada's Inflation Reaches 2% Target for the First Time Since 2021

October 9, 2024 | Posted by: Angela Robinson

Good news for Canadians! Inflation has slowed to its lowest level since February 2021, with August seeing inflation at 2%, right in line with the Bank of Canada’s target. This change could soon lead to lower interest rates, which is great news for anyone looking to buy a home or refinance their mortgage.

What Does This Mean for You?

After a period of high inflation and rising interest rates, the Bank of Canada is expected to start reducing rates more aggressively. There’s even a possibility of a 50-basis point rate cut in the near future. With inflation under control, the focus is shifting to stimulating the economy, which could make borrowing more affordable for homeowners and buyers.

For you, this could mean:

• Lower mortgage rates: If you’ve been holding off on buying a home due to high interest rates, now might be the time to act.
• Potential to refinance: If you’re currently locked into a higher-rate mortgage, you could benefit from refinancing at a lower rate, reducing your monthly payments.

What’s Been Driving These Changes?

Gas prices played a significant role in the drop in inflation, along with decreases in several other sectors. While inflation has slowed, mortgage interest costs and rent remain major contributors to higher prices. Mortgage interest costs have risen by 18.8% over the past year, and rents have increased by 8.9%.

Even with inflation cooling down, these housing-related costs remain high, which is why interest rate cuts could help ease financial pressure.

What Should You Do Next?

• Keep an eye on interest rates: The Bank of Canada will make its next rate decision on October 23, and there’s a chance we could see a significant rate cut. Stay informed and reach out to us for guidance on how these changes could impact your mortgage options.
• Consider refinancing: If interest rates drop, refinancing your existing mortgage could help lower your payments. Let us review your current mortgage and see if it makes sense to refinance.
• Plan your next move: Whether you’re a first-time homebuyer or looking to upgrade, falling rates could make your next home purchase more affordable. We can help you understand how these changes might benefit you.

Final Thoughts

As inflation continues to slow and interest rates are expected to drop, there may be opportunities to reduce your mortgage costs or make your dream of homeownership more attainable. Get in touch with us to discuss how these developments could affect your financial plans and to explore the best mortgage options available to you.

Let’s make sure you’re ready for what comes next, get in touch today!

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