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Welcome to our Monthly Better Mortgage Select newsletter, our first monthly newsletter of 2025!

 

Brought to you by Daniel Patton, Michael Zanzini, Lorenzo Podda, and of course, our President - Dave Butler.

   
   

Around this time last year, we waited with bated breath for the December 2023 inflation data to be released - hoping that Canada’s inflation rate would cool and that we would be given the signs of an eventual rate cut from the Bank of Canada.  Canadians were struggling and prime rate was sitting at 7.20%. Most fixed rates had a ‘6’ in front of them, and the housing market was in a complete standstill.  But when the data was released to the public last January, it inexplicably showed inflation had gone UP!! It came in at 3.4%, above the 3.1% figure of the previous two months.  At the time, it seemed like hope was beginning to fade and many people wondered if we would ever get back to the Bank of Canada’s 2% inflation target rate.

 

Well, what a difference a year can make!  Not only did we reach the 2% inflation target (in August to be exact), but we now have inflation sitting beneath the target rate.  This isn’t just a one-off, either.  In the last four months, Canadian headline inflation has come in UNDER the 2% target (October’s 2% inflation reading was a round-up from 1.95%).  There are a lot of bright economists here in Canada, that feel inflation will have a tough time getting up to the 2% target in the first half of this year.

 

So, what does this mean?

 

It means the Bank of Canada is going to have more rate cutting to do, albeit they will likely do it slowly.  For 2025, the market is currently pricing in as little as one cut (0.25%), or as many as four cuts (1.00%). With that said, the days of the 0.50% ‘Jumbo’ rate cuts are likely gone for now (unless we get some severely bad, unexpected economic data or news).  Our evidence comes from the Bank of Canada itself.  At their latest press conference in December, Governor Tiff Macklem made it very clear that Canadians should expect the next rate cut(s) to be the typical size (0.25%).  He would not commit to discussing how many rate cuts, but his exact words were:


   
   

Without explicitly saying it, Mr. Macklem is telling us that the Bank of Canada expects to only cut by 0.25% at a time in 2025, until they believe that the economy is in balance.

 

So, with that said, it is our belief at Better Mortgage Select, that the Bank of Canada will be reducing it’s key rate by 0.25% at next Wednesday’s interest rate meeting.  This will bring the prime rate down to 5.20%, with most variable rate mortgage holders sitting anywhere between 4.20% and 4.95% (depending on their discount to prime).

 

We will then enter February, only one Bank of Canada interest rate cut away from some variable rate mortgages having a ‘3’ in front of them again.

   
   

We know for a fact that many of you are wondering why fixed interest rates are not going down in the face of multiple Bank of Canada rate reductions.  Fixed rates have been holding steady for the last four months while the Bank of Canada has decreased variable rates by 1.25% during that span. 

 

The key here, is to remember that the fixed mortgage interest rates get priced from the Canadian bond market, while variable rate pricing is set by the Bank of Canada.  What we are experiencing now, is the variable rate pricing catching up to what the bond market has been expecting for some time. 

 

Basically, the bond market is run by trillions of dollars and moves by the second - whereas the Bank of Canada meets roughly every six weeks to discuss lowering their key rate.  The bond market priced in (predicted) the Bank of Canada’s last couple interest rate moves, several months before the moves themselves. Thus, that is why we are not seeing much movement lately on fixed mortgage rates.  For fixed rates to come down further from here, the bond market is going to want to see worse economic data than expected.  The bond market will also want to see some clear data, or signs, that the Bank of Canada is going to have to lower rates more than expected.  And when that happens, the bond market will move FAST.  The bond market will pick up on the data and begin to rapidly re-price, and only then will we see fixed rates break out of their holding pattern that they are currently in.

 

Another factor to consider as it pertains to fixed mortgage rates: 2025 is widely expected to see the return of the annual “spring real estate market”.  With interest rates at their lowest levels since 2022, the big talk in the banking world is how busy this spring will be on the home-buying front.  This is likely to lead to “interest rate wars” amongst banks and mortgage lenders, with them conceding margins and looking to snag some market share.  We expect the fixed rate stalemate to break open in the spring/summer with some attractive deals to be had. 

   
   
   

That’s right, our 2025 webinar schedule was released earlier this month, and our first webinar date is approaching quickly (only 3 weeks away!).

 

“NAVAGATING REFINANCES, RENEWALS & PRE-APPROVALS in 2025” will start at 6:30pm EST on Wednesday February 12th and our experts will guide you on how to achieve the best results with your application in the ever-changing mortgage world in 2025.

   
   
   

And don’t forget to click the link above to sign up for the other webinars that we are hosting this year.  We are committed to getting you the most up-to-date mortgage info, whether it be our newsletters, breaking news emails, or our webinars.

   
   

January is always a great month for game-planning with our strategic partners, so let’s see what our management team was up to:

 

Our partners at Michael St. Jean Real Estate were bringing the energy to start the year.  For their 2025 kick-off meeting, they brought in our very own Vice-President, Daniel Patton, along with Hamilton Tiger-Cat legend, Simoni Lawrence.  Dan brought the stats, Simoni brought the passion, and Michael St. Jean unveiled the blueprints he has developed for the 2025 real estate year with an eye on BIG results. 

   
   
     
   

Earlier this month our very own Senior Mortgage Agent, Michael Zanzini, kicked off the new year in style! Michael joined our partners at Our Neighborhood Realty to provide a comprehensive market update for over 60+ real estate agents. He also tackled all their mortgage-related questions, helping agents and their clients put the right foot forward in what is likely to be a busier 2025 real estate market. The room was buzzing with positive energy and enthusiasm!

   
   
     
   

Daniel was a busy man this month as he, along with Operations Manager, Lorenzo Podda, visited the Rock Star Real Estate office.  It’s always great sitting down with the talented team at Rock Star and sharing what we are seeing in current data and trends in the market.  Daniel and Lorenzo were also able to find some time earlier in the month to collaborate with Rock Star agents Rene Masse and Josh Arnett, as well as young marketing phenom Aidan Karadza, going over client experience feedback and ways our companies can further work together to continue to go above and beyond for our clients during the home buying process.

   
   
   
   
   
   
     
   

The 2025 real estate and mortgage worlds are starting off with a much different sentiment compared to the last couple years.  What that means is yet to be seen, but one thing is for certain: at Better Mortgage Select, our amount of completed pre-approvals this January have already surpassed our company’s 2024 January tally - and we still have 25% of the month to go.  The tug of war between buyers and sellers continues, but we appear to be approaching a turning point.

   
     
   

Just a friendly reminder to come visit us on our socials, where we put out a ton of videos with tips and information to help you navigate the wild world of mortgages! Check out the links below and give us a follow!

   
   
   
     
   

As always, if you have any questions or want to do some mortgage planning, feel free to reach out to us at: