Tempered Rate Hike Forecasts for 2019

Marci • December 12, 2018

Floating-rate mortgage holders who had feared the Bank of Canada’s recent full-steam-ahead view towards continued rate hikes can take a breather—at least for now.

The central bank adopted a more dovish stance at yesterday’s rate hold announcement, which confirmed a growing chorus of analysts who now expect the bank to take a slower pace on future rate hikes.

“Recent events aren’t likely to push the bank off of a tightening path, but they do remove any urgency in getting to a neutral policy rate,” wrote Brian DePratto, a senior economist with TD Bank. “We no longer expect the Bank of Canada to hike its policy interest rate in January. Spring 2019 now appears to be the more likely timing, allowing for the bank to ensure that the growth narrative is back on track.”

Just a month and a half earlier, when the BoC hiked rates for the fifth time in 15 months to 1.75%, it made clear its intention to bring rates to a “neutral range” it says is needed to keep inflation in check while not hindering the economy. It estimated that range to be between 2.50% and 3.50%.

The BoC reiterated this intention yesterday, but admitted it may now take longer to get there. “The appropriate pace of rate increases will depend on a number of factors,” the bank’s statement read.

And again this morning, during a speech in Toronto, Governor Stephen Poloz reiterated that the pace of increases will be “decidedly data dependent.”

“We will continue to gauge the impact of higher interest rates on consumption and housing, and monitor global trade policy developments,” he said. “The persistence of the oil price shock, the evolution of business investment and our assessment of the economy’s capacity will also factor importantly into our decisions about the future stance of monetary policy.”

Bond Market Skeptical About Future Rate Hikes

Despite the Bank of Canada’s commitment to higher rates, the bond market is signalling it’s not so sure.

The Canadian 5-year bond yield, which leads fixed mortgage rates, has plummeted to a six-month low.

“The bond market has doubts about the Bank of Canada’s commitment to rate hikes in 2019,” Adam Button, Chief Currency Analyst at ForexLive, told CMT.

“Those doubts turned to outright defiance after [yesterday’s] statement,” he added. “The market is now pricing in fewer than two rate hikes in 2019. Before the BoC statement, the market was looking for a 65% chance of a hike at the January 9 meeting. That’s plunged to 25% and now a hike isn’t fully priced in before mid-year.”

What Does This Mean for Mortgage Rates?

Mortgage rate observers can be forgiven for expecting fixed rates to fall. With a decline in bond yields of this magnitude, that’s what you would normally see.

But Robert McLister, founder of rate-comparison website RateSpy.com,  explained  that things are different this time.

“Normally we’d have seen at least one bank chop advertised fixed rates by now. But not this time. Banks are purposely padding margins,” he wrote. “On top of this, banks are increasingly building in small premiums to offset the policy/rate-driven slowdown in housing/mortgage growth, late-cycle housing/economic risk, and more stringent capital rules.”

Floating Rates Looking Attractive Again

With inflated fixed rates and the prospect of fewer Bank of Canada rate hikes over the next year, variable and adjustable-rate mortgages are looking more appealing to an increasing share of mortgage shoppers.

Nearly a third of CMHC-insured homebuyers (31%) chose a variable-rate mortgage over a fixed rate in the third quarter of 2018, the housing agency reported last week.

This is the highest share of high-ratio borrowers to choose variable rates since CMHC began tracking these figures. Typically no more than 20% go variable, according to the agency’s historical data.

McLister said the best variable rates for default-insured mortgages are currently around 2.80%, or 3.04% for those who are refinancing.

“That gives you at least a three-rate-hike head start over conventional 5-year fixed rates,” he noted.

 

This article was written by Steve Huebl and was originally published on the Canadian Mortgage Trends on December 10th 2018. 

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Deposit vs. Down Payment: Key Differences for Homebuyers

By Marci Deane • July 29, 2026
When you’re buying a home, two terms often cause confusion: deposit and down payment . While they’re related, they serve very different purposes in the homebuying process. Here’s what you need to know. What Is a Deposit? A deposit is the money you provide when you make an offer on a property. Think of it as a show of good faith that proves you’re serious about purchasing. How it works : Typically, you provide a certified cheque or bank draft that your real estate brokerage holds in trust. If your offer is accepted, the deposit remains in trust until the deal moves forward. If negotiations fall through, the deposit is refunded. Connection to your down payment : Once the sale is finalized, your deposit becomes part of your total down payment. Why it matters : The amount is negotiable, but a larger deposit can make your offer more attractive in a competitive market. Keep in mind, however, that if you back out after conditions are removed, you risk losing your deposit. What Is a Down Payment? Your down payment is the amount you contribute toward the purchase price of your home when securing a mortgage. Minimum requirement : In Canada, the minimum down payment is 5% of the home’s purchase price. Anything less than 20% requires mortgage default insurance. Sources : Down payments can come from your savings, the sale of another property, RRSP withdrawals (through the Home Buyers’ Plan), a gift from family, or even borrowed funds. Example: How They Work Together Imagine you’re buying a $400,000 home with a 10% down payment ($40,000). When you make your offer, you provide a $10,000 deposit . Once conditions are met, that deposit is transferred to your lawyer’s trust account. At closing, you add the remaining $30,000 to complete your full down payment. The lender provides the rest—$360,000—through your mortgage. The Bottom Line Your deposit shows commitment and secures your offer, while your down payment is what makes the mortgage possible. Together, they work hand in hand to get you into your new home. 📞 If you’d like clarity on deposits, down payments, or any other part of the mortgage process, let’s connect. I’d be happy to walk you through it step by step.

RRSP Home Buyers’ Plan Explained: A Smart Way to Buy Your First Home

By Marci Deane • July 22, 2026
Saving for a down payment is one of the biggest challenges first-time buyers face. What many don’t realize is that the Canadian government offers a program designed to make it easier—the Home Buyers’ Plan (HBP) . This program allows you to withdraw money from your RRSP to help purchase your first home, without immediate tax consequences. Here’s how it works: Who Qualifies? To be eligible, you generally need to be a first-time home buyer. In practical terms, this means you must not have owned a home in the past four years, nor lived in a property owned by your spouse or partner during that time. There are also special allowances if you’re living with a disability or helping a relative with a disability. In these cases, you can use the HBP even if you’ve owned a home more recently. How Much Can You Withdraw? Under the program, you can access up to $35,000 from your RRSP as an individual. Couples can combine their withdrawals for a total of $70,000 . These funds must have been in your RRSP for at least 90 days before you take them out. Paying It Back The HBP isn’t “free money”—it’s an interest-free loan from your own retirement savings. You’ll have 15 years to repay the full amount back into your RRSP, starting in the second year after withdrawal. Each year, the CRA will send you an HBP Statement of Account outlining how much needs to be repaid. If you don’t make your repayment in a given year, that amount will be added to your taxable income. Why It’s a Smart Strategy The HBP can give first-time buyers a powerful boost toward homeownership. It helps you put together a larger down payment, which can reduce your mortgage amount and monthly payments. Just remember: it’s important to balance the short-term benefit of homeownership with the long-term impact on your retirement savings. Next Steps Thinking about using the Home Buyers’ Plan? Let’s sit down and review whether it’s the right move for you. Together, we can create a strategy that gets you into your first home while keeping your future financial goals on track. 📞 Reach out anytime—it would be a pleasure to guide you through the process.

Bank of Canada Holds Rate at 2.25% — July 15, 2026

By Marci Deane • July 15, 2026
The Bank of Canada announced today that it is holding its target for the overnight rate at 2.25%, with the Bank Rate at 2.5% and the deposit rate at 2.20%. The tone of today's announcement is notably more optimistic than previous months. Here's what's changed and what it means for you.