"What's going to happen with interest rates?" "Where's the market headed?"
We get this question daily and here is our response—forecasting is basically a fancy way of saying "guessing the future." And if there's one thing I've learned in my 26 years in the financial world, it's this: Predicting the future of interest rates and market trends is a gamble where the house always wins.
Because, truth bomb—nobody knows. Not really-well except maybe the Simpsons!
We're all just making educated guesses based on the patterns of the past and the current economic pulse.
Take the big question: "Is the Bank of Canada going to slash interest rates in 2024?"
Honestly, I hope so but can't guarantee it. I highly doubt that rates will go up anymore this year though.
Globally, economic growth is slowing, leading to a gradual decrease in inflation. In Canada, economic growth has stalled since mid-2023, with consumer spending and business investment declining. Despite this, growth is expected to pick up gradually in mid-2024. Inflation in Canada remains elevated, primarily due to high shelter costs, but is projected to ease back to the 2% target by 2025. The Bank remains vigilant about inflation risks and is committed to restoring price stability for Canadians.
"Low, stable and predictable inflation promotes economic stability. By raising or lowering rates, we can cool or boost demand in the short term. However, longer-term economic growth depends on a growing population and improvements in productivity—neither of which are sensitive to interest rates" states Governor Tiff Macklem.
You can read or watch the Bank's February 6th Press Release for more information.
Here's where I stand: When it comes to deciding whether to buy a home or what to do about your mortgage renewal, staring into a crystal ball won't do you any favors.
What matters is right now. Can you afford the mortgage payments today? If yes, that's your green light. Trying to time the market is tricky and very often doesn't work. A client asked me late last year what I thought rates were going to to. My response was, "I have no clue and neither does anyone else!"
In essence, when you're looking at whether to buy a home now or wait, the only question that should be keeping you up at night is whether it makes sense for you, right here, right now. Can you afford it? Is it the right move for your current situation? That's the real deal.
So, if you're feeling adrift in a sea of uncertainties and what-ifs, give us a call. My team and I are here to help you navigate these turbulent waters, offering clarity and support every step of the way.
Because in the world of mortgages and markets, the best decision is an informed one.
Renee