In the unpredictable landscape of real estate and mortgage rates, the housing market can be fun, exciting, and a little nerve-wracking to navigate.
Within this market, future home buyers and investors are often gauging the pros and cons of choosing variable mortgage rates in Toronto, especially with the potential for rates to drop in 2024.
In this article, we will examine where variable mortgage rates might be heading this year, providing valuable insights as you look to make housing decisions in Toronto’s bustling economy.
Understanding Variable Rate Mortgages
To predict the trends of 2024, we need to first grasp what a variable rate mortgage is exactly.
Variable rates shift in accordance with fluctuating market interest rates. This means that your monthly fees can go up or down, all based on what’s happening in the economy and policy decisions by the Bank of Canada.
These rates differ from fixed-rate mortgages, which have unchanging interest rates over the course of your term, regardless of what’s happening in the world or via policy changes.
What to Expect in 2024
Financial analysts and economy professionals have shared their insights into future mortgage rates, and most believe that these rates will drop in 2024.
This belief is based on several economic indicators, including price changes (inflation), worldwide conflicts, and local economic plans and policies.
Here is how these factors could influence variable rate mortgages in Toronto:
- Global economic slowdown: If the world’s economy slows down, as it’s predicted to do, it might lower interest rates on a global scale. This could cause the Bank of Canada to lower its rates in response. If this happens, people with variable rate mortgages could have a lower interest rate and pay less each month.
- Government and Bank of Canada policies: The Bank of Canada may decide to lower interest rates to help boost the economy. This policy could make variable rate mortgages in Toronto more appealing in 2024.
- Inflation targets: The Bank of Canada’s inflation targets could cause an adjustment to interest rates. Lower or stable inflation by 2024 could make interest rates drop. This could make variable rate mortgages more attractive to potential homebuyers.
Why consider a variable rate mortgage now?
Expecting lower mortgage rates in 2024 might inspire those thinking about owning a home in Toronto to consider variable rate mortgages. Here’s why:
- Potentially lower payments: If you decide on a variable rate mortgage now, you could benefit from possible lower rates. This could decrease how much you end up paying each month.
- Market leverage: Choosing a variable rate mortgage when rates are dipping brings benefits for homeowners. You can choose to switch to a fixed-rate mortgage should the rates begin to stabilize at a low level.
- More flexibility: Variable rate mortgages usually have more flexible prepayment options. This can help you pay off your mortgage quicker without incurring large penalties.
Get the Best Rates With Northwood Mortgage
The success of a variable rate mortgage in Toronto hinges on many personal, economic, and financial factors. However, the predicted drop in mortgage rates in 2024 holds incredible allure for those looking to buy a home and save money while doing so.
At Northwood Mortgage, we can help you navigate the pros and cons of variable rate mortgages within Toronto’s constantly evolving market landscape. To schedule a consultation with one of our experienced mortgage brokers, or for more general information about our services, contact us here.
