CTV News Update June 4 – Anticipating a Drop in Interest Rates

Clinton Wilkins joins CTV News, as they report on the anticipated drop in mortgage interest rates. Clinton maintains his belief that a change in interest rates, this summer, is inevitable.

Todd Battis 0:00
Mortgage holders in the Maritimes will be watching what the Bank of Canada does tomorrow with interest rates. Many economists are anticipating a drop in the rate which is sat at 5% since last summer. CTV’s Jesse Thomas has more.

Jesse Thomas 0:15
Adam Cox waited as long as he could before renewing the mortgage on his Dartmouth home, hoping rates would drop. But his new fixed rate mortgage, signed this year, has increased his monthly mortgage payments by 22%.

Adam Cox 0:28
I knew they were gonna go up, it was just how much they were gonna go up, and how much can I afford?

Jesse Thomas 0:32
The new rate worked out to an additional $250 per month on his mortgage bill. Cox can only afford it because of a job promotion. But without it, he’d be in a tougher financial position.

Adam Cox 0:44
I’m single, I don’t have a second income to provide for paying a mortgage. It was just tricky to get a mortgage to begin with.

Jesse Thomas 0:55
Average monthly payments for new mortgages have surged across Canada including Halifax, where data from the Canadian Mortgage and Housing Corporation show average monthly payments have steadily climbed. And by the final quarter of 2023, Halifax’s average monthly payment had risen to $1,888 while the national average jumped to $2,143. It’s the same for all three Maritime Provinces with steady increases in New Brunswick, where the average payment is around $1,370. And on PEI, where monthly mortgage payments average around $1,583. Almost as much as Nova Scotia where payments averaged $1,622. Halifax based mortgage broker Clinton Wilkins believes the key interest rate which has been stuck at 5% since July 2023, will soon soften and the rates fall.

Clinton Wilkins 1:44
If we don’t see change in June. I think we’ll see some change in July. And I really truly think by the end of 2025, we’re gonna see these rates in the 2% lower range.

Jesse Thomas 1:55
Over the next two years, more than 2.2 million mortgages in Canada are coming up for renewal. And while many are waiting to see what the Bank of Canada does, Wilkin says he’s seen a trend like never before. Where more clients are opting for a shorter term fixed rate mortgage, in the hopes the interest rates could cool off.

Clinton Wilkins 2:12
I would say I’ve never done so many three-year fixes I’ve done right now. Certainly a big shift to borrowers doing a variable, which may be surprising to some people.

Jesse Thomas 2:24
Now, what’s interesting is mortgage delinquency rates have fallen across major Canadian cities reaching a 10 year low around 2022. But there are signs that that is turning in the other direction. For the first time since the pandemic numbers are showing that there are more delinquency rates trending upwards, and that can be a case of mortgage holders just being unable to keep up with their monthly payments. And perhaps Todd, a sign of just how much household debt some of these Canadian families are carrying amongst these high inflationary times.

Todd Battis 2:57
Yeah, right. Good point. What kind of mortgage did the broker that you had on there suggest people should be looking at now fixed rate or variable?

Jesse Thomas 3:06
Well, most brokers that we spoke to for this story suggested a fixed rate mortgage but Clinton Wilkins in the story said it really comes down to personal basis and what the client is comfortable with. But he says he’s starting to see people moving towards a more variable rate options, and he says that might be a sign that the people are seeing those interest rates potentially coming down here in the near future.

Todd Battis 3:32
Okay, yeah. And we’ll see what the Bank of Canada does Jesse Thomas in the north end of Halifax whereas this evening, we’re going to make this our web poll, and we’re asking the question, when you renew your mortgage, will you choose a fixed or variable rate? Your options are fixed variable, or I’m not sure yet. CTV News survey dozens of mortgage brokers across Canada about how to tackle your next mortgage, and you can find a breakdown for different parts of the country and vote on our poll at that website. CTVNewsatlantic.ca