What's the interest rate outlook in Canada for the year ahead?

By Fergal McAlinden 18 Jan. 2024 for CMP

The direction of rates will have huge influence over Canada’s housing and mortgage markets in 2024.  

Dropping interest rates on both the fixed and variable fronts are expected to be among the big trends of the year in Canada’s mortgage market, although there’s little consensus as to when both rates will start to fall in earnest – and how far they’ll slide.

Fixed rates have already been on the way down in recent weeks, with top banks cutting in response to plunging bond yields, while all eyes are on the Bank of Canada and a possible date for the beginning of cuts to its benchmark rate, which leads variable mortgage rates.

In its newly released forecast for the year ahead, digital mortgage brokerage nesto noted that each of Canada’s five leading banks anticipate a lower central bank policy rate by the end of the year.

The company highlighted that Bank of Montreal (BMO), Royal Bank of Canada (RBC), and Scotiabank all believe the Bank of Canada’s trendsetting rate will have fallen to 4.0% by the end of the fourth quarter, while Canadian Imperial Bank of Commerce (CIBC) forecasts a 3.50% rate by then and National Bank see it sitting at 3.25%.

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