Is this the turning point for interest rates?
Interest rate announcements impact every Canadian borrower and every Canadian lender. Borrowers tend to be younger (i.e those with mortgages for homes or loans for businesses) and lenders tend to be older (i.e. those with larger fixed-income portfolios). The spike in interest rates has not had the desired effect on reducing consumer spending and slowing the economy…..yet. March 2024 will mark the 4th anniversary of the pandemic shut down.
Those that secured 5-year mortgages before the pandemic will need to renew at rates that will make their heads spin. The “higher-for-longer” stance of the major world banks means that those who renegotiated in 2020 and 2021 – and may renew in 2025 and 2026 – may also face higher rates. And let’s not forget, the demographic reality that more seniors will want and need higher interest rates for their fixed-income portfolios. I’m afraid that if you are waiting for interest rates to subside, you may be waiting a long time.
Many of the major central banks have decided to hold rates steady, but few officials are yet declaring victory over inflation.
