2024 Mortgage Year is Wrapped!
A Year in Review
Our (mortgage) playlist of market highs, lows, and a few interesting things in between.
A Year of Easing the Mortgage Squeeze
According to our expert True North brokers and 2024 data, home buyers and owners were weary of enduring two full years of rate hikes and thrilled to see some solace in 2024 — both in interest rate cuts and proposed mortgage rule changes.
Mortgage rate relief finally arrived mid-year when the Bank of Canada reversed course to reduce interest rates, snapping the housing industry out of its quiet reverie towards year-end.
Then a flurry of new (overdue?) mortgage rules were announced, aiming to improve home-buying access and affordability.
Nationally, housing inventories gained while demand calmed (that's an understatement for the condo sector), allowing home prices to stabilize or even decline in some major markets, like Vancouver and Toronto.
Let's take a closer look at what happened in 2024.
The tale of two halves (of 2024).
First Half of 2024
Waiting for high rates to end.
Canadians spent the first half of the year waiting impatiently for the Bank of Canada to start the 'slow walk' back on interest rates.
Although mortgage transactions in the first six months of 2024 were higher overall than last year, the 23-year-high interest rates (a BoC policy rate of 5.0% and bank prime rates of 7.20%) seemed to last forever, with anticipated early-2024 rate cuts not materializing.
Variable rate FOMO or JOMO.
With variable rates not dropping yet and 5-year fixed mortgage rates lower by about 0.85% than the October 2023 peak (when our best-advertised rates hit around 5.62%), it set up
a rate choice conundrum — variable-rate FOMO or JOMO?
Our clients had to decide between the fear of missing out on dropping variable rates and their potential savings or go with the joy of missing out on delayed variable drops to lock into a fixed rate (and sleep more soundly at night, even if it cost them more over their term).
And if JOMO it was, our clients decided to take our great 1-, 2-, and 3-year fixed rates a lot more often vs. the standard 5-year choice (see the stats below) to allow them to renew into lower market rates sooner.
Second Half of 2024
The wait was rewarded — with 1.75% of rate cuts.
Rate relief finally began in June 2024 with the first Bank of Canada policy rate cut. Four more rate announcements later, the declines ramped up — including two double-cuts, one in time for Halloween and another gifted before the holidays, for a much lower policy rate at the end of the year than the beginning.
High inflation finally tamed.
The central bank didn't start lowering rates on a whim (though we wouldn't have complained if they did).
As inflation approached its 2.0% target a whole year sooner than the BoC had anticipated, it relented and entered a rate-reduction cycle.
By then, however, almost everyone could see the darkening economic clouds on the horizon — weakening business investment and productivity, stalled hiring, and growing household debt.
Lower mortgage rates = improved home affordability.
Along with lowering interest rates, national home prices stabilized (apart from hot spots) due to decreased demand as inventory played catch up, increasing by over 16% from September 2023 to September 2024 (CREA, October 12, 2024).
These factors combined to improve home affordability, allowing for lower mortgage payments and easier mortgage approvals for some (with a lowered federal mortgage stress-test rate, as well).
Variable rate choice gained ground.
With the prime rate dropping like fall temperatures, the variable rate choice started to look more attractive than it had in quite a while — considering that fixed rates had already made their main declines.
Towards the end of 2024, the variable rate gained favour and surpassed the 5-year fixed rate choice.
(Variable rates have historically saved homeowners more than a fixed rate over the life of their mortgage, but time will tell if the past rapid rate-hike cycle dented in this factoid.)
Rounding out the year: several mortgage rule changes.
Adding to the mortgage relief, in Fall 2024, the federal government announced mortgage rule changes, such as:
- An increase in the insured mortgage home-price cap for all buyers and 30-year amortizations allowed for first-time and new-build buyers
- More flexibility for uninsured mortgagees to find a better deal at renewal
- Allowing insured mortgagees to borrow more to build a secondary suite
The eased rules aimed to increase financial access to housing, facilitate lower payments, and incentivize home building.
Higher rates endured until mid-2024.
Canadians weathered a Bank of Canada policy rate of 5.0% and bank prime rates of 7.20% for almost a year until June 2024, when it initiated the first cut in 4 years (with a single notch down of 0.25%).
After June, the cuts continued at every meeting thereafter. The last two sessions saw a double cut of 0.50% each, bringing the rate down to 3.25% and most bank prime rates to a more comfortable 5.45%.
It's safe to say that most did not expect such a rapid decline, considering how long the central bank waited for inflation and other numbers (like the labour market) to show significant weakening before dropping its rate.
Inflation continued deflation to 2.0%.
Inflation started out the year at 3.4%, higher than the 2.0% target set by the Bank of Canada (though down from a high of 8.1% reached in June 2022).
The CPI (Consumer Price Index) slowly inched its way down (not in a straight line) to hit below target at 1.6% for October's release — and bounced within the target range of 1-3% until year-end.
The interesting thing about 2024's CPI readings is that stripping out the high shelter cost component, like mortgage interest and property taxes, headline inflation would have hit target for the February 2024 reading (that shows January's CPI).
Pivoting our innovative rate products even lower.
True to our (mortgage) nature, when rates go low, we're obsessed with going even lower to help clients save more.
- Our Rate Relief™ short-term product offered the lowest 6-month in Canada, spreading more holiday cheer with a further reduction (from 2.99%) towards year-end
- Our No Commitment Mortgage™ offered the lowest open variable rate in Canada, with a rate dipping to 4.95% (P- 0.50%)
These exclusive products gave eligible homeowners access to better rates, offering a needed budget break along with the possibility of renewing at lower market rates later to save more.
True North Mortgage also offered clients better 'standard' rate specials with flexible mortgages all year, with a low 5-year insured fixed rate starting from 4.24% to round out the year.
Top Mortgages Products
True North Mortgage saw these three mortgages chosen most often (for all lenders, including in-house, CMHC-approved THINK Financial).
The 5-year fixed rate ranked the highest, though less so than usual (typically chosen around 60% of the time) in favour of a lot more 3-year fixed rate choices.
The 5-year variable rate gained in choice towards year-end, as rate cuts piled up.
1. 5-year fixed (36%)
2. 3-year fixed (34%)
3. 5-year variable (24%)
*2023 stats: 5-yr (43%), 3-yr (22%), 5-yr var (18%)
Top Mortgage Transactions
In 2024, True North Mortgage helped more clients buy a home with discounted mortgage rates or switch lenders for a better deal and extra budget room.
Slightly fewer homeowners sought a refinance this year to extend their amortization for lower payments or tap home equity to consolidate higher-rate debt with a lower rate.
1. Purchases (57%)
2. Switches (24%)
3. Refinances (19%)
*2023 stats: Purchases (55%), Switches (22%), Refinances (18%)
2024: Fixed vs. Variable Rate
Variable rates weren't very popular at the beginning of 2024, as the Bank of Canada was slow to start reducing rates.
However, as the rate cuts mounted, the variable rate choice began to surpass the 5-year fixed rate choice.
In November 2024, a variable rate was chosen 34% of the time compared to 21% for a 5-year fixed.
Note: A 5-year fixed rate is usually chosen 60% of the time vs. 30% for a variable rate.
2024: Fixed Term Choices
In 2024, the highest interest rates in 23 years persisted until mid-year, and home buyers and owners flocked to the security of a fixed mortgage rate and its unchanging payments.
But rather than taking a longer 5-year lock-in — with rates potentially on the way down in the coming months and years — many still chose shorter terms, with a strategy to renew into lower market rates sooner.
Towards year-end, the 5-year fixed gained more ground, but the 3-year rate choice remained attractive, and the 1-year gained slightly by year-end.
Over $3B in Funded Deals
2024 was a better year (than 2023) for the mortgage industry.
At True North, we helped many Canadians, coast to coast, get a better rate and mortgage through a simpler process to save thousands.
Our flexibility over the big banks also helped us provide customized short-term mortgage solutions for those with more complex mortgage needs, giving some financial control back to homeowners during a challenging year.
True North Mortgage first appeared on the mortgage scene in 2006. We've built our reputation by obsessively providing our clients with a better choice than going directly to a Big Bank.
Over 1,770 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 number of 5-star reviews this year!
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Learn MoreA mortgage year wrapped — another great year (with you) ahead.
We're here to help, all year round.
Amid higher rates, great mortgage advice that puts you first can make a huge difference.
Your mortgage is likely one of the biggest financial commitments you'll take on, and even a few cents off your rate — or a mortgage that doesn't come with costly restrictions — can save you thousands over the term and life of your mortgage.