Still Waiting for 1% Mortgage Rates? Here's Why They’re Not Coming Back
Why the Era of Ultra-Low Interest Rates is Over.
During the pandemic, Canadian homeowners saw something rare—five-year fixed mortgage rates under 2%. For many, this was a once-in-a-lifetime opportunity to secure ultra-low borrowing costs. But if you're hoping those rates will return, economists now agree: they're not coming back.
Rates that low were an emergency response to a global crisis. As inflation surged and the economy rebounded, the Bank of Canada had to pivot. With strong job numbers, ongoing government spending, and elevated inflation, we're now in a higher-rate environment that's expected to stick around.
What’s Keeping Rates Higher for Longer?
Several factors are working together to keep rates elevated, even as inflation shows signs of cooling:
Persistent Inflation: Inflation remains above the BoC’s 2% target, keeping rate cuts limited.
Global Volatility: Energy prices, supply chain costs, and global uncertainty all play a role in driving up borrowing costs.
Tight Labour Market: Canada’s job market continues to show strength, reducing the urgency for major rate cuts.
Government Policies: Federal and provincial spending, especially in housing and infrastructure, puts added pressure on inflation.
For homeowners and buyers, this means adapting to a new normal.
How to Navigate Higher Mortgage Rates
Whether you're renewing soon, looking to buy, or exploring real estate as an investment, here’s how to move forward strategically:
✅ Re-evaluate Your Budget: With rates expected to remain in the 4–6% range, adjusting your expectations is key.
✅ Secure a Pre-Approval: Locking in a rate now can protect you from sudden increases, especially if you’re buying this fall.
✅ Explore Variable and Hybrid Options: If you expect rates to trend down over time, certain mortgage products can offer more flexibility.
✅ Work With a Mortgage Professional: Every lender is different. A mortgage broker can help you compare multiple offers and tailor a strategy that works for your timeline and goals.
Coming Off a Pandemic-Era Rate?
If you secured a mortgage in 2020 or 2021, your renewal may bring a payment shock. Take action now:
Request a Renewal Review: Don’t automatically accept your lender’s first offer.
Consider Refinancing: Extending your amortization or consolidating debts could create breathing room.
Compare Lender Offers: Better options may be available outside your current bank.
Final Thoughts
The window for ultra-low rates has closed, but that doesn’t mean good opportunities are gone. The right mortgage strategy can still save you money and support your long-term goals—especially when tailored to current market conditions.
Let’s talk about your options
If you want help planning your next move in this rate environment, reach out today.
Contact us today at 204-997-5021 or mcabral@204mortgages.com to learn more!
