Is this the Bank of Canada’s last pause before a cut? Is it a good time to buy today and which mortgage to get?

The Bank of Canada kept rates unchanged for a sixth straight meeting and officials signaled they were moving closer to cutting rates but still needed more evidence of a slowdown in inflation.

The Bank’s management, led by Tiff Macklem, on Wednesday left the benchmark overnight rate unchanged at 5%. This decision was expected by most market participants and economists surveyed by Bloomberg.

“We are seeing what we wanted to see, but we need longer evidence to be confident that progress toward price stability will be sustained,” Macklem said in his opening statement.

Economists surveyed by Bloomberg expect the bank to theoretically be ready to cut rates on June 5 at its next meeting. But market traders changed their bets after disappointing US inflation figures and the Bank of Canada announcement. The likelihood of a 25 basis point (0.25%) rate cut in June is now close to a coin toss, compared with more than two-thirds just yesterday. Today there is a complete consensus among economists and traders regarding the rate cut in July.

When asked by reporters whether the bank would be able to cut rates as early as June, Macklem replied: “Yes, it’s within the realm of possibility,” but the Bank wants to see more progress in reducing price pressures (reducing inflation).

“Overall, this statement is consistent with the central bank slowly moving toward lowering interest rates, and a sustained decline in core inflation in the next Consumer Price Index report will be key in determining whether that process can begin at its next meeting in June.” “said Andrew Grantham, an economist at CIBC, in a report to investors.

Stephen Brown of Capital Economics stressed that Macklem’s comment about the need to see inflation progressing over “a long period of time” could be interpreted in different ways. But the central bank appears open to cutting rates in June if monthly changes in benchmark prices remain subdued over the next couple of months, Brown said.

In an accompanying monetary policy report, Bank officials said they expect the economy to grow 1.5% in 2024, an increase from the 0.8% previously forecasted. They also raised their forecasts for potential growth and said they expected “moderate excess supply” to persist through the end of 2024.

The Bank of Canada forecasts inflation will fall to 2.2 percent by the end of this year, a slightly faster slowdown than previously expected, and officials still believe inflation will reach its 2 percent target in 2025. Officials estimate inflation for the second quarter of this year at 2.9 percent, largely due to high gasoline prices.

The Bank of Canada’s next interest rate meeting will take place on June 5.

If you are thinking about buying a home in the near future, now you may have a unique chance to buy a house or apartment at a good price and take, for example, a fixed mortgage for 3 years at 4.89% or a variable rate mortgage with a large discount (Prime-1% or more). When the Bank of Canada starts lowering rates, your variable mortgage payments will also go down, and you will be insuring yourself against the highly competitive real estate market, rising prices, and the possible recurrence of unhealthy “bidding wars.”We have already written several times that the process of buying/selling real estate is associated with significant costs in addition to the down payment. This includes the Land Transfer Tax and attorney fees, realtor services (for sales), inspections, real estate valuation, etc. For example, when purchasing, expenses average 1.5-2% of the price of a house or apartment.
In order to make the purchase or refinancing process easier for our clients, we are launching a special spring offer starting in April:
CASH-BACK UP TO $4,500 when applying for a mortgage with our company MortgageLegko (Michael Tulchenetskiy & Denys Derzhavets)
This offer is valid when submitting an application from April 1 to June 30, 2024 and closing the transaction by November 7. Minimum mortgage amount is $100,000. The minimum contract period is 3 years. Purchase, refinance or renewal (switch/transfer) of a mortgage. This offer cannot be combined with any other special offers and is available only to qualified borrowers.
Cash back payment is made after closing the transaction, in proportion to the size of the mortgage, as follows:
Mortgage Size                               Cash Back
$100,000.00 – $499,999.99          $1,200
$500,000.00 – $749,999.99          $2,300
$750,000.00 – $999,999.99          $3,400
$1,000,000 or more                         $4,500
For more information, please our office toll-free at 1-855-761-7001 or ask questions at www.mortgagelegko.com.