2023 Mortgage Rate Recap

We spent the year adjusting to the shock of so many outsized rate hikes handed out in 2022 (like 0.50%, 0.75%, and 1.00%) as the Bank of Canada tried to get on top of sky-high inflation and drag the economy down to a normal speed.

Hope was high in 2023

Canadian homeowners were desperate to know that there was a light at the end of the rate-hike tunnel, yet we still saw three more interest rate increases.

Many scrambled and struggled to absorb the higher mortgage costs, especially those with variable-rate mortgages or buying a home among higher market and stress test rates. Our already-lofty home prices didn't help affordability, with the national average price down only about 16% from the peak of March 2021.

Mortgage payment woes

Renewals ran smack into stress test rates that had some homeowners qualifying at over 8.0%, preventing them from switching lenders to a cheaper rate (though insured borrowers caught a break in the fall).

The government also tried to address mortgage payment woes of almost 60% payment increases in some cases. Directives from the bank regulator and The Canadian Mortgage Charter (Fall 2023) implored banks to help people out with extended amortizations and a sympathetic ear (the latter is not typically part of a Big Bank's skill set).

Variable-rate trouble and shorter fixed terms

If you had a variable rate with fixed payments (called a VRM), you likely found out what your trigger rate and trigger point meant (lurking in your contract). It meant that your amortization was ticking up, often way past the original length, to threaten more mortgage payment shock at renewal.

Those who chose fixed rates this year agonized over the term length — with many people going with a shorter 3-year term than usual.