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The Bank of Canada announced on April 10th that they will hold interest rates steady. The current overnight rate remains at 5.00%.

We predicted that the Bank of Canada would hold rates steady in our interest rate forecast as a result of slowing inflation and a weakening economy.

The current overnight rate remains at 5.00%. 

Key Takeaways

  • The Bank of Canada has kept their policy interest rate steady at 5.00% as of their latest interest rate announcement
  • The next interest rate announcement is on Wednesday, June 5, 2024.
  • Our April mortgage outlook:  fixed rates will continue to drop and variable rates will remain the same. 
  • Talk to an experienced mortgage advisor to understand the announcement’s impact on your mortgage payment or upcoming renewal

Why did the Bank of Canada hold interest rates? 

Commentary from Perch’s CEO and Principal Mortgage Broker, Alex Leduc:

The latest Bank of Canada interest rate announcement occurred on April 10th. The Bank of Canada has seen inflation trend in the right direction, but it’s still not quite low enough. Markets expect inflation to continue its downward trend and the first cut is expected in June to stabilize inflation in the target range and prevent inflation from decelerating past their target range.

In the chart below, you can see how our 5-year variable rate forecast has changed over time based on the Bank of Canada interest rate announcements. (Like what you see? Sign up to get free, personalized mortgage insights and our monthly mortgage outlook!)

The current focus for the Bank of Canada remains bringing inflation back in line with the targeted 2%. The Bank of Canada is anticipated to begin cutting rates in late 2024 to the end of 2026. During the next few years adjustable rate mortgage holders are likely to see lower payments.

Related: Why are variable rates higher than fixed rates?

Buying now gives you the opportunity to lock in a lower purchase price in today’s market, benefitting you in the long run. Think of it this way: You date the mortgage payment, but you marry the purchase price.

In other words, your mortgage payment can fluctuate as you change terms, but your purchase price remains the same.

We increasingly see new buyers opting for a shorter mortgage term with a higher amortization to minimize their monthly payments. This enables them to potentially renew at a lower rate a few years from now, and in the long run, accelerate their amortization to pay off their mortgage earlier.

How will the latest Bank of Canada interest rate announcement affect home prices?

For the month of April, we anticipate fixed rates will continue to decrease and variable rates will remain the same. National sales activity dropped by 3.1% in February after climbing 12.4% since December, however, sales in February were still 5% below the 10-year average. On a year over year basis, February 2024 sales activity is up 19.7% from one of the worst February data recorded in the past two decades.

Canada’s inventory edged up by 1.6%, nowhere near inventory levels we’ve seen in the middle of 2023, thus, the sales-to-new listings ratio edged down to 56.6% in February, down from 58.8% in January, in comparison, this ratio peaked at 67.9% in April 2023. According to CREA, a ratio between 45% and 65% is generally consistent with a balanced housing market. “It’s looking like February may end up being the last relatively uneventful month of the year as far as the 2024 housing story goes,” said Shaun Cathcart, CREA’s Senior Economist. “With so much demand having piled up on the sidelines, the story will likely be less about the exact timing of interest rate cuts and more about how many homes come up for sale this year.” explained further Shaun Cathcart.

The Aggregate Composite MLS Home Price Index was flat on a month-over-month basis in February, remaining unchanged, however it is up 0.8% year-over-year. The actual (not seasonally adjusted) national average home price was $685,809 in February, up 3.5% year over year.

Where will mortgage rates be in 2024?

According to financial models by Alex Leduc, Principal Broker at Perch, 5-year variable mortgage rates should start dropping in late 2024.

Will mortgage rates go up in the next 5 years?

Based on our latest Mortgage Rate Outlook, expect 5-year variable mortgage rates to start dropping in 2024 and continue doing so into 2025. We’ll be updating our mortgage rate forecast after every Bank of Canada interest rate announcement – you can subscribe to our mortgage rate forecast for free.

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What is the Bank of Canada interest rate today?

The current Bank of Canada interest rate sits at 5.00%, with a 0.25% rate hike announced on July 12, 2023.

When is the next Bank of Canada interest rate announcement?

The next scheduled Bank of Canada interest rate announcement is Wednesday, June 5th, 2024 at 9:45 AM ET.

What are the interest rate announcement dates in 2024?

There are a total of 8 Bank of Canada interest rate announcements each year. The dates for 2024 are as follows:

  • Wednesday, January 24, 2024
  • Wednesday, March 6, 2024
  • Wednesday, April 10, 2024
  • Wednesday, June 5, 2024
  • Wednesday, July 24, 2024
  • Wednesday, September 4, 2024
  • Wednesday, October 23, 2024
  • Wednesday, December 11, 2024

(Source: Bank of Canada)

The Bank of Canada typically makes their interest announcement at 9:45 AM Eastern Time.

Here’s what else we’re reading:

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