2023 Mortgage Rate Recap

A tightening cycle spill-over into 2023.

With the most rapid policy-rate rise since the 1990s starting from 0.25% in March 2022 (for a total of 16 x 0.25% hikes that year), we saw three more hikes from the Bank of Canada (BoC) in 2023 to rest at 5.0% and bring bank prime rates to 7.20%

January's 0.25% hike was the tail end of the 2022 'major tightening cycle,' and June and July's hikes of 0.25% were in response to economic resiliency (too-warm spending and jobs market) and the central bank's concern that inflation's decline would snag on its way to its 2.0% target.

Mortgage holders the country-over were relieved to see the BoC continue a rate hold to end out 2023.

Inflation's deflation from 6.3% to 3.1%.

Inflation started out the year at a lofty 6.3% (from a high of 8.1% in June of 2022) and was reduced by almost half to 3.1% by year's end. However, the cooling of price increases hit a couple of snags, with CPI (Consumer Price Index) readings going up in May and again in August.

The May snag brought out two more policy rate hikes from the Bank of Canada (June and July), but the August snag didn't provoke another hike, with concern about pushing Canadian budgets over the edge. Inflation continued to cool for the rest of the year as the rapid rate-hike cycle worked its way through the economy.

Top Mortgages Products

True North Mortgage (all lenders, including in-house, CMHC-approved THINK Financial) saw these three mortgages chosen most often.

The 5-year fixed rate ranked the highest, though less so than usual (typically chosen around 60% of the time) in favour of more 3-year fixed rate choices.

The 5-year variable rate still held sway, likely due to the high probability that the rate hikes were almost done.

1. 5-Yr Fixed-Rate (43%)

2. 3-Yr Fixed Rate (22%)

3. 5-Yr Variable-Rate (18%)

Top Mortgage Transactions

True North Mortgage helped many clients buy a home with discounted mortgage rates or switch lenders for a better deal and extra budget room.

Others sought a refinance, with many choosing to extend their amortization for lower payments or tap home equity to consolidate higher-rate debt with a lower rate.

1. Purchases (55%)

2. Switches (29%)

3. Refinances (16%)

2023: Fixed vs. Variable Rate

Variable rates weren't very popular at the beginning of 2023, with rate hikes still on the Bank of Canada's agenda.

After the final two 0.25% hikes in June and July (which directly affect variable-rate mortgages), 5-year variable-rate mortgages gained in popularity by year's end, surpassing the 5-year fixed rate (usually chosen 60% of the time vs. 30% for variables) — as some clients strategized that rates may have peaked and looked to benefit on a climb down.

2023: Fixed Term Choices

In 2023, the 3-year fixed rate saw substantial interest, far surpassing its typical allure.

With interest rates at a 22-year high, more home buyers and owners wanted the security of a fixed mortgage rate and unchanging payments — but strayed from the 'standard' choice of a longer 5-year lock-in.

More choose shorter terms, hoping to renew earlier into lower rates, assuming rates would start climbing down (as anticipated) in the coming months and years.

Over $3B in Funded Deals

2023 was a slower year for the mortgage industry. Yet, we helped so many Canadians, coast to coast, get a better rate and mortgage through a simpler process.

True North Mortgage first came onto the mortgage scene in 2006, and we've been providing home buyers and owners with a better choice than going directly to a Big Bank ever since.

Over 1,900 more 5-star reviews

We continued to provide excellent service — simplifying the mortgage process for our clients while finding their lowest rate and the right mortgage fit.

They let us know how much they appreciated the unbiased advice and streamlined experience by giving us another whopping 1,900 5-star reviews this year!