After two years of relentless rate hikes, the Bank of Canada pivoted to an easing cycle, delivering five consecutive rate cuts that lowered the overnight rate to 3.25%.
Inflation cooled to 2.0% by year-end, offering some additional relief to consumers, even though affordability challenges persist.
On the policy front, major regulatory and government changes aimed to ease housing pressures and support buyers. Insured mortgages saw an increase in the allowable purchase price cap, while first-time buyers gained access to 30-year amortizations, offering greater flexibility to enter the housing market.
Meanwhile, the government introduced several new programs, including initiatives encouraging the development of secondary suites in an effort to address housing supply shortages and improve affordability.
Here’s an overview of some of the year’s top mortgage stories, rate movements and mortgage-related stock performance.
Top mortgage stories of 2024
Rates and housing market movements
- The year of rate cuts: After the Bank of Canada’s rate peak in 2023, 2024 became the year of rate relief. The central bank delivered five consecutive rate cuts totalling 175 basis points, bringing the overnight rate down to 3.25%. These cuts led to a corresponding decline in the prime rate, easing borrowing costs for variable-rate mortgage holders. Fixed mortgage rates also dropped throughout the year, following declines in the 5-year bond yield, providing additional relief for borrowers.
- Resilient inflation trends: Inflation fell steadily throughout the year, with headline CPI dropping to 2.0% by November, down from a peak of 8.1% in mid-2022, helping to ease some financial strain on Canadians.
- A housing market rebound: Home sales and prices bounced back by year-end, with average prices climbing to $694,411 (+7.4% YoY) as of November.
- Mortgage renewal wave: 2024 saw approximately $251 billion in mortgages renew at higher rates, with even more slated for 2025 and 2026. The average monthly payment increase was estimated at between $400 and $500.
- Amortization challenges ease: Fixed-payment variable-rate borrowers who previously saw skyrocketing amortizations began reducing them as rates fell and as renewals came due. Banks like TD, RBC and BMO reported a decline in ultra-long amortization periods by Q4.
- Delinquency rates inch higher: Early-stage delinquencies, which remained near record lows in 2023, began to rise—and are expected to continue rising in 2025—reflecting the financial pressures still facing many borrowers due to high interest rates.
Top deals & lender moves of 2024
- National Bank acquires CWB: National Bank’s $5-billion acquisition of Canadian Western Bank was finalized, expanding its footprint in Western Canada. (Story)
- Nesto acquires CMLS Group: Online mortgage lender Nesto announced its acquisition of mortgage finance company CMLS Group, a move that expands its presence in Canada’s mortgage market and enhances its product offerings. (Story)
- Home Trust merges with Fairstone Bank: Home Trust finalized its merger with Fairstone Bank, creating new opportunities for customers and brokers through an expanded range of financial products and services. (Story)
- DLCG shareholders approve preferred shares acquisition: DLC Group saw its shares surge after shareholders approved the acquisition of its preferred shares, marking a significant move to strengthen the company’s capital structure. (Story)
- HSBC Canada acquisition completed: RBC finalized its purchase of HSBC Canada at the start of the year, marking one of the largest banking deals in Canadian history. (Story)
Government programs and policy updates
- Stress test removal for uninsured mortgage switches: OSFI, Canada’s banking regulator, announced the removal of the stress test on uninsured mortgage switches. (Story) However, the move caused widespread industry confusion about how lenders should respond. CMT revealed recently that BMO opted to reinstate the stress test while it “explores alternative stress test approaches” for uninsured switches at renewal. (Story)
- New mortgage rules take effect: New rules increasing the insured mortgage cap to $1.5 million and introducing 30-year amortizations for first-time buyers took effect in December. (Story)
- Stress test removed for insurable mortgage switches: The Fall Economic Statement confirmed the removal of the stress test for insurable mortgage switches, aligning with OSFI’s updated guidelines. (Story)
- Federal programs support secondary suites: Two new federal programs aim to assist homeowners in building secondary suites, providing loans and grants to help increase housing supply and improve affordability. (Story)
- Foreign buyer ban extended: The federal government has extended the foreign buyer ban until 2027. (Story)
2024 interest rate movements
The Bank of Canada’s rate cuts in 2024 marked a sharp pivot from the aggressive tightening cycle of the previous two years. The overnight rate, which started the year at 5.00%, was lowered by 175 basis points over five consecutive cuts, ending the year at 3.25%. This easing provided much-needed relief for variable-rate borrowers, though payments remained elevated compared to pre-pandemic levels.
On the fixed-rate side, the 5-year government bond yield—the key benchmark for fixed mortgage pricing—saw notable fluctuations throughout the year. After peaking at 3.89% in April, yields trended lower over the remainder of the year, ending 2024 at 2.95%.
| Indicator | Year-end | 2024 change |
|---|---|---|
| Bank of Canada overnight rate | 3.25% | -175 bps |
| Prime rate | 5.45% | -175 bps |
| Avg. 5-yr fixed rate on new insured mortgages1 | 4.39% | -88 bps |
| Avg. variable rate on new insured mortgages1 | 5.37% | -146 bps |
| 5-year posted rate | 6.49% | -55 bps |
| Min. Qualifying Rate (MQR) | 5.25% | No change |
| 5-yr government bond yield | 2.96% | -21 bps |
Stock moves
And finally, here’s a look at the performance of Canada’s big banks and public companies that make the majority of their revenue in the mortgage business.
| Big 6 banks | Share price | 2024 change | Dividend yield |
|---|---|---|---|
| Bank of Montreal | $139.91 | +7.2% | 4.55% |
| CIBC | $91.07 | +43% | 4.26% |
| National Bank | $130.73 | +30% | 3.49% |
| Royal Bank of Canada | $173.42 | +39% | 3.41% |
| Scotiabank | $77.39 | +14% | 5.48% |
| TD Bank | $76.78 | -9% | 5.47% |
| Mortgage companies | Share price | 2024 change | Dividend yield |
|---|---|---|---|
| Atrium MIC | $10.95 | +0.47% | 8.49% |
| Equitable Bank | $98.65 | +13% | 1.86% |
| Firm Capital | $11.94 | +1.18% | 7.84% |
| First National | $40.32 | +2% | 6.20% |
| MCAN | $18.11 | +2.2% | 8.61% |
| Timbercreek Capital | $7.06 | +0.38% | 9.77% |
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Last modified: December 31, 2024