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The Bank of Canada announced on September 6 they will hold interest rates steady for the time being.

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 paused rate hikes for the time being, with the next announcement coming on October 25.
  • Our September mortgage outlook: fixed rates will increase in September, with variable rates remaining steady.
  • Today’s best mortgage rates are 5.44% for 5-year fixed and 5.95% for 5-year variable.
  • Talk to an experienced mortgage advisor to understand the announcement impact on your mortgage payment or upcoming renewal
  • Read more from Perch CEO Alex Leduc in the Financial Post

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How will the latest Bank of Canada interest rate announcement affect mortgage rates?

During the previous interest rate announcement, the Bank of Canada hiked interest rates by 0.25 basis points in July, bringing the key rate to 5.00%.

Recent data has shown that inflation is slowing and the CPI is getting closer and closer to the Bank of Canada’s target, leading to some analysts predicting that the Bank of Canada might hold off on further rate hikes for the time being. After a 25bps increase in January the Bank of Canada paused rates to evaluate the effect that hikes were having on inflation, and then resumed tightening monetary policy with another 25bps hike in June. This pause indicates the Bank of Canada think the effect of their rate hikes may be getting close to bringing inflation back in line to their target of 2.00%.

As of today, variable mortgage rates are still higher than fixed mortgage rates. With inflation showing signs of returning to normal, mortgage lenders including the banks, are pricing in that rates are likely to go lower within the next 5 years.

The unemployment rate is on the rise,  reaching 5.5% in July, indicating the economy is slowing as the Bank of Canada hoped.

As of our August mortgage rate outlook, we predict that in the long term mortgage rates will trend towards 4%. 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 is bringing inflation back in line with the targeted 2%. The Bank of Canada is anticipated to cut rates by 2% over 2024 and another 1% over 2025. Adjustable rate mortgage holders will see lower payments. In the short term, we're predicting the Bank of Canada will hold rates steady to the end of 2023.

Related: Financial Post - Real estate sector breathes sigh of relief after Bank of Canada holds rate at 5%

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

2022 saw declines in home prices across the board in Canada, bringing prices closer to their pre-pandemic levels in some cities. With analysts across the board predicting an eventual policy reversal on the horizon from the Bank of Canada, the market might not stay low for long. If rates start to come back down, it's likely prices will quickly rebound to their prior highs and beyond.

Buyers are coming back and the real estate market is seeing more activity following expectations that rates will hold steady for the short term. We believe that property prices have hit their bottom earlier this year and we'll continue to see increases in property prices in the second half of 2023 and into 2024.

In May alone, the average Toronto home price was up 3.50% according to the Toronto Regional Real Estate Board.

Borrowers won't see lower rates for at least 1 year, but housing prices in major cities have already started to recover from their lows earlier this year. The next few months will be a very opportune time to buy and anyone on the sidelines should seriously consider executing now before the window of opportunity closes.

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 early 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, October 25, 2023 at 10:00 AM ET.

What are the remaining interest rate announcement dates in 2023?

There are a total of 8 Bank of Canada interest rate announcements each year. The remaining dates for 2023 are as follows:

  • Wednesday, October 25, 2023
  • Wednesday, December 6, 2023

The Bank of Canada typically makes their interest announcement at 10:00 AM Eastern Time.

Here's what else we're reading:

How bond rates impact the mortgage market (3 min read time)

How mortgage insurance impacts your borrowing power (4 min read time)

5 things first-time home buyers should know about getting a mortgage (3 min read time)

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