As we wrap up a year full of economic twists and turns—and interest rate ups and downs—we wanted to look back at some of the top mortgage-related stories that graced our pages in 2023.
Two rate holds by the Bank of Canada early in the year turned out to be a head-fake and prematurely led to market expectations that the rate-hike cycle was over. That in turn caused a short-lived run-up in home prices in the spring and and renewed upward inflationary pressure before the central bank delivered two more quarter-point rate hikes over the summer.
But markets and economists seem confident that 2023 was the Year of the Rate Peak, and that 2024 should herald in some welcome rate relief for borrowers with rate cuts expected by mid-year.
All of this was taking place against a backdrop of falling inflation. The year began with Canada’s headline Consumer Price Index inflation growing at a pace of 5.90%. As of November, that pace has slowed to 3.10%.
The average non-seasonally adjusted house price also reached a high of $729,044 in May before sliding back down to $646,134 as of November. That’s still up 5.5% from January, but down more than 20% from the all-time high reached in February 2022.
Here’s an overview of some of the year’s top mortgage stories, rate movements and mortgage-related stock performance.
The foundation for variable interest rates is the Bank of Canada’s overnight rate and prime rate, which both finished the year 75 basis points higher compared to where they started the year. That was on top of the 400 bps worth of rate hikes delivered in 2022.
Meanwhile, the most important benchmark for fixed-rate pricing—the 5-year government bond yield—ended the year down by 25 basis points to 3.17%. That was before it reached a peak of 4.42% in early October.
| Indicator | Year-end | 2023 change |
|---|---|---|
| Bank of Canada overnight rate | 5.00% | +75 bps |
| Prime rate | 7.20% | +75 bps |
| Avg. 5-yr fixed rate on new insured mortgages1 | 5.54% | +69 bps |
| Avg. variable rate on new insured mortgages1 | 7.06% | +163 bps |
| 5-year posted rate | 7.04% | +55 bps |
| Min. Qualifying Rate (MQR) | 5.25% | No change |
| 5-yr government bond yield | 3.17% | -20 bps |
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 | 2023 change | Dividend yield |
|---|---|---|---|
| Bank of Montreal | $131.30 | +5.5% | 4.62% |
| CIBC | $63.85 | +15% | 5.67% |
| National Bank | $100.95 | +10% | 4.21% |
| Royal Bank of Canada | $134.20 | +4.8% | 4.12% |
| Scotiabank | $64.51 | -1% | 6.6% |
| TD Bank | $85.58 | -2% | 4.79% |
| Mortgage companies | Share price | 2023 change | Dividend yield |
|---|---|---|---|
| Atrium MIC | $10.49 | -0.2% | 8.58% |
| Equitable Bank | $87.20 | +53% | 1.85% |
| Firm Capital | $10.87 | +0.7% | 8.72% |
| First National | $38.53 | +2.7% | 6.38% |
| MCAN | $15.85 | +6.4% | 9.65% |
| Timbercreek Capital | $6.66 | -8.6% | 10.41% |
As we turn the page on yet another tumultuous year headlined by rising interest rates and falling home prices, we wanted to take a look back at some of the top mortgage-related stories of 2022 and how mortgage rates fared.
Consumers grappled with rising prices in all nearly all aspects of the economy thanks to soaring inflation. But new homebuyers did get a reprieve when it came to Canadian real estate prices, which fell after reaching an all-time high earlier in the year. As of November, the average unadjusted price fell to $632,802, down 12% year-over-year and 22.5% below February’s price peak.
On the other hand, borrowers had to deal with soaring interest rates, which slowed mortgage borrowing as non-mortgage debt grew.
Here’s an overview of some of the year’s top themes, rate movements and mortgage-related stock performance.
The foundation for variable interest rates is the Bank of Canada’s overnight rate and prime rate, which both finished the year 400 basis points higher than where they began.
Meanwhile, the most important benchmark for fixed-rate pricing—the 5-year government bond—ended the year up over 200 basis points, which resulted in significantly higher fixed mortgage rates by year-end.
| Indicator | Year end | 2022 change |
| BoC overnight rate | 4.25% | +400 bps |
| Prime rate | 6.45% | +400 bps |
| Avg. 5-yr fixed rate on new insured mortgages1 | 4.79% | +227 bps |
| Avg. variable rate on new insured mortgages1 | 5.35% | +388 bps |
| 5-yr Posted Rate | 6.49% | +170 bps |
| Min. Qualifying Rate (MQR) |
5.25% | No change |
| 5-yr government bond yield | 3.42% | +217 bps |
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.
1 Source: Bank of Canada via Statistics Canada, as of October 2022.
