As Canadian buyers actively seek to purchase homes, the coming months could offer a rare opportunity. According to experts, mortgage rates may soon reach their lowest levels in years, while the real estate market remains quieter than usual. If you’ve been considering buying, the next few months might be the perfect time to act.

Mortgage Rates on the Decline: What You Need to Know

Mortgage rates for five-year fixed terms are hovering just above 4% at many institutions, with some even dipping below that in September. However, economists believe that while the Bank of Canada is expected to reduce interest rates by up to 2.5 percentage points over the next year, mortgage rates won’t fall as drastically.

This is because long-term mortgage rates are tied to bond markets, which saw a significant dip over the summer. But with the U.S. economy showing unexpected strength, those bond markets have rebounded, slowing the momentum of rate cuts.

What Experts Are Saying

According to BMO senior economist Robert Kavcic, five-year mortgage rates will likely bottom out between 3.5% and 4% by 2025. For homebuyers, this could mean more favorable borrowing conditions. Kavcic noted, “While mortgage rates below 4% won’t make buying entirely affordable, they will definitely bring more people back into the market.”

Ron Butler, a Toronto-area mortgage broker, agrees with this outlook. He advises buyers to consider variable-rate mortgages if they can handle the risks, as these offer flexibility. “You may even have the chance to lock in at a better fixed rate later,” Butler adds, suggesting that rates under 4% are not out of the question.

Why Timing Matters for Buyers and Investors

For those who are actively watching the market, the combination of stable or falling mortgage rates and a quieter real estate landscape creates a golden window of opportunity. But don’t expect rates to plummet to 2.9% anytime soon. Butler warns, “That’s not in the cards for the near future.”

Still, waiting until mortgage rates drop below 4% could bring a noticeable uptick in buyer activity by 2025. This gradual shift means that those ready to make a move in the coming months may benefit from a less competitive market.

Key Takeaways for Homebuyers, Sellers, and Investors:

• Current Mortgage Rates: Five-year fixed rates are just above 4%, with the potential to dip between 3.5% and 4% by 2025.
• Experts’ Advice: Variable-rate mortgages may offer more flexibility for those able to manage potential risks.
• Market Outlook: A quieter real estate market and lower rates could create an ideal buying window, especially for early 2025.

Final Thoughts: Now Is the Time to Stay Informed

The real estate market is always evolving, and staying informed is crucial. As experts anticipate a gradual reduction in mortgage rates, there’s value in keeping an eye on market trends to make well-informed decisions.

To stay up to date with the latest news on the real estate market and mortgage trends, follow our blog for more insights. If you’re ready to explore your options or have any real estate needs, contact us today!