Recession, Rates & THAT Four Letter Word

Article written by Leslie Smith

Recession, Rates & THAT Four Letter Word

Based on the *technical* definition (i.e. "sustained period of weak or negative growth in real GDP (output) that is accompanied by a significant rise in the unemployment rate."), it would appear so. So what does this mean for rates, real estate and the economy?A quick recap...
The Bank of Canada held it's overnight rate when it met October 25th. The Fed in the US also opted to leave interest rates unchanged following its most recent meeting, leaving many to speculate that both central banks may finally be done their tightening cycle. The BoC has its last meeting of the year in December, however, on the heels of an increase in the unemployment rate, it's unlikely we will see any more increases this year.That four-letter word
CUTS!!! That's the big question on everyone's mind. When the *!$% will we get some relief in interest rates? Well bond yields (they are what drive fixed rates) have fallen significantly from their peak in early October. Clearly the market believes the Fed is done raising and is now looking towards future cuts. When those occur it is hard to predict. If a recession has indeed arrived, that will likely have an impact on
future rate decisions.What's to come?
Higher rates, but what does that really mean? The super low rates of the pandemic will be a distant memory. It's likely that the realistic outcome for rates in 2024 and 2025 will be in the 4% range. Which means if you have a renewal coming up, give yourself LOTS of time. There are going to be a lot of variables to consider, and you want to make sure you don't have to take whatever your current lender is offering just because you run out of time.

Leslie Smith | Mortgage Agent

Lic. M19000973

905-242-5243mortgage@leslieasmith.ca
www.leslieasmith.ca