With the blink-and-you’ll-miss-it days of summer speeding its way towards fall, here’s a quick rundown on where things are headed in terms of Canadian mortgages, the economic impact and recommendations for home buyers and owners.

Inflation fears, no more

In the coming months, we believe variable mortgage rates will increase slightly and fixed rates will further decrease. For the Ontario market we believe there will be a shift away from fears of lingering inflation and we will begin to see an increase in housing activity unlike previous months, which was dampened by aggressive rate hikes and a tightening monetary policy. This will also be mirrored in other markets such as British Columbia and Alberta.

More hikes ahead for the Bank of Canada

There are three more Bank of Canada rate announcements for 2022, we’re expecting a further 50 to 75 total basis point increase to the BOC overnight rate, depending on inflation numbers and job reports in the coming months.

Economists expect soaring food, energy, interest rates and the ongoing labor shortages to push the economy into a moderate and short-lived recession in 2023, which the Canadian economy should quickly recover from in 2024 and beyond.

Job vacancies continue to be a big problem for employers as they continue to raise wages to combat a tightening labor market and shrinking workforce.

Population growth woes are catching up with Canada, as the struggle to fill skilled labor roles is becoming more of an issue and an aging baby boomer’s population is exiting the workforce, Canada will now more than ever depend on immigration to fill labor roles and increase population in sparsely populated markets across Canada.

Bond yields have tumbled 25% since June highs, as of today, the 5 and 10-year bond yields are at April levels which further signals incoming lower fixed rates.

Consumer price index (CPI) for the month of June came in at 8.1%, which is lower than the anticipated 8.4%. This is a good indicator that inflation isn’t as aggressive as some have speculated, and we likely have seen the worst of it in June 2022.

The best mortgage rates in Canada, right now:

The current best 5-year fixed rates range from 4.35% to 4.59% and 5-year variable rates range from 3.55% to 4.10%.

Things looking up for first-time home buyers

For first-time home buyers, there are many opportunities that weren’t available a few months ago due to an increase in average sale times, lack of motivated buyers and considerably similar qualifying rates as we had in January and February through variable mortgage options.

Due for a mortgage renewal? Sit tight

For homeowners who are coming up for mortgage renewal, continue to monitor our rate forecasts. It would be wise to renew into a discounted 1-year mortgage term until mortgage rates begin to dramatically decrease in the coming year.

For mortgage lenders, expect volume to increase

We anticipate mortgage volumes to increase, as those who have been on the sidelines waiting to “time the market” jump in and find an equal balance between low competition and better interest rates. People who needed to purchase a home since January 2022 have now had their plans on hold for quite a while, as their down payment savings are slowly depleting due to rent payments and potentially pricey storage fees, some will now justify the current rate environment as tolerable given the lower property values.

We also expect to see more people choosing to maintain their current mortgage rather than upsize their living space as they await better mortgage interest rates in the coming months.