Mortgage Rate Predictions for Toronto in 2023
It’s no secret that mortgage rates in Toronto have been on the rise lately, and it looks like they will continue to go up in 2023. In fact, they’ve been slowly but steadily increasing for the past few years and there’s no sign of them slowing down anytime soon. If you’re in the market for a new home or are thinking about refinancing your existing mortgage, you’re probably wondering what this will mean for you.
The good news is that mortgage rates are still relatively low by historical standards. Even with the recent increases, mortgage rates are still well below where they were just a few years ago. However, if you’re not careful, you could end up paying more than you need to.
That’s why it’s important to connect with an experienced mortgage broker to compare mortgage rates from different lenders before making a decision.
But what can you expect mortgage rates to be in Toronto in 2023? Below are the current predictions to help you make an informed decision.
The Central Bank of Canada is working to fight inflation. Whether this takes a year or two years out, the Central Banks will begin lowering rates again to activate the economy and pull us out of the recession. This creates lower mortgage interest rates. The Bank of Canada is estimating it will take until early 2024 for inflation to subside enough for rates to fall. However, if the economy slows harder and faster than expected, we could see the Central Bank lower rates in 2023.
But this does not mean that rates will stabilize at the lowest levels seen during covid. As fixed mortgage rates approach a high of 5.5%, the expectation is that rate normalization may occur into the low to mid-range, or in the low 3% range for mortgage rates.
A calculated way to reduce your risk against rising mortgage rate increases is to position yourself to take advantage of lower rates once they begin to fall.
According to the Central Bank, it could take 1-2 years for inflation to decrease and for their rates to drop. But once recession begins, the bond yield could start dropping quicker, allowing fixed rates to begin to fall months ahead of Central Bank rate drops.
One way to guarantee yourself the best mortgage rates is to opt for a shorter-term fixed rate, such as a 2-3 year fixed. This rate will renew at a time when rates may be lower. Another option you have is to opt for a variable rate, which may be higher in 2022, it will also leave open the possibility of falling rates within a 5-year term.
Contact James Tuttle today to understand what positioning would work best for your individual mortgage needs for the coming year.