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  • Writer's pictureRIHANA PEIMAN

2022's Canada Mortgage Market at a Glance



As we move into 2023, Canadians witnessed a series of mortgage interest rises in the last eight months since the Bank of Canada has been attempting to achieve the 2% inflation target and restore price stability.


Since September 1991, Canadian inflation surpassed 5% for the first time in January 2022, resulting in a yearly inflation rate of 6.9% in 2022. In comparison, the headline CPI increased 1.0% on a year-over-year basis in January 2021. As the result of recent changes to mortgage interest rates, a greater number of Canadian households have been carrying high levels of mortgage debt. What Is the CPI and How It Measures Inflation?


Elevated levels of household debt and high house prices are recognized as two key interconnected vulnerabilities in Canada. House prices on average rose more than 50% during the pandemic. According to the Bank of Canada, in April 2022, house prices were up 24% nationally compared with April 2021, and up 53% relative to April 2020. Although one may say that the sharp increase in house prices over the course of the pandemic has resulted in significant equity gains for many households, those who entered the housing market in 2022 have been more affected by the Fed’s interest rate hikes. The Bank of Canada’s target for the overnight rate rose from 0.25% in January 2022 to 4.25% in December 2022 through seven consecutive rate hikes. The highest it has been since January 2008. An Overview of the Overnight Rate Increase in 2022 And Its Difference With the Prime Rate


If you are a potential homebuyer or you have a variable rate mortgage and/ or you are close to your mortgage renewal date, you want to know what is next in 2023? May the mortgage rate go higher if inflation is not on track to drop less than 4.25% in 2023? Although interest rates are still likely to rise early next year, this short article's preference is to take a neutral view and wait for the Bank of Canada's official announcement in early 2023. “Looking ahead, Governing Council will be considering whether the policy interest rate needs to rise further to bring supply and demand back into balance and return inflation to target", the Bank of Canada said in a news release on December 7, 2022. So, let’s stay optimistic and wait for January 25th, the next rate announcement by the Bank of Canada. Bank of Canada's 2023 Schedule For Interest Rate Announcements


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