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VIDEO: Mortgage Rates are Dropping!

Josh Tagg Edmonton Mortgage Broker

Interest Rates have DROPPED in the last week. From a high point around October 1st we have seen a big decrease. Watch our conversation about this, or read the transcript below!

Jay Lewis: So I’ve been hearing about interest rates, of course that’s still a hot topic, right? You know, what are interest rates doing and I’m even kind of hearing rumors about maybe it’s not what we thought it would be. Can you share any light with us on that?

Josh Tagg: For sure. You know, a lot of the talk around interest rates over the last year and a half or so and especially over the last several months has been about interest rates going up and up and up. So, I get a lot of calls from people worried and concerned about that.

Interest rates are, when we’re talking about fixed mortgage rates, those rates are highly impacted or influenced by the bond rates in Canada. So you know if you’ve ever looked at like Canada savings bonds for five years, that’s the bond rate that I’m talking about.

And so when those rates go up, we find that also the fixed rates go up and likewise when those rates go down, we find that those rates also go down. So I’m going to show you what’s been happening here over since January. The chart here on the screen shows the bond yield changes. So that’s not the actual fixed interest rates, but when the bond goes up, the fixed rates go up. When the bond goes down, the fixed rates go down.

And they’ve ranged throughout the year about a 1.7% difference from the lowest point to the highest point. And we saw the lowest point happen in the spring when there was some bank failures that happened in the United States that really pushed people toward the safer investment of government bonds, which made those rates drop, and we saw rates of around 4.5%.

But through the summer and especially into the fall, as inflation sort of ticked back up, there was more expectation of rates being higher for longer. We did see the bond rate got to like a, something like a 16-year high around October 1st, or last week of September.

But since that time, we had the Bank of Canada give a new announcement and they did not increase their interest rate, which is a welcome reprieve for all of us. And then also we’re seeing the jobs data is coming in, the unemployment rate, not so much in Alberta, but in other parts of the country, the unemployment is ticking up.

So, and we’re seeing flatline economic growth data coming in. So that’s actually causing a downward push or influence on the bond yields. And so we’ve seen over half of a percent, about a 0.6% drop from the high point just over a month ago to where the rates have been over the last few days.

If this trend continues, we’re going to see more and more interest rate drops. Over this past weekend, we saw many of our lenders dropped the rate about a third of a percent. That’s for the five-year fixed. And I think if we continue to see some downward movement on that bond, we’re going to see additional or more downward movement on those fixed interest rates as well, which is super exciting.

Now, on the flip side, there’s still the whole Bank of Canada thing, right? And with the Bank of Canada, until recently, the economists were saying that we might not start seeing interest rate decreases until the last part of next year, 2024. But now, there’s a growing consensus among the country’s top economists that we’ll see more of an interest rate decrease in 2024 than they were thinking, like upwards of a full percent now instead of only a half, and that it could actually start as early as the spring. April is what many of them are saying.

Jay Lewis: So that’s quite a bit of good news then for our buyers, isn’t it?

Josh Tagg: It really is. And you’re in Edmonton, where the prices are pretty stable, which is great. So if somebody’s not quite ready to get into a home, they don’t have to necessarily worry about it too much of you know doing it before the year’s over or anything.

But we are seeing that downward movement which is going to make it easier for people to qualify to purchase. And then of course in other markets like I also work with people in Calgary right, and in Calgary, the market sort of slowed down a little bit for the fall.

But the prices are steady and they have been heading upward in Calgary. So this might be the reason to get in now rather than wait for when rates drop and we see even more activity. I would imagine in the spring we’re going to see an increase in purchasing activity in both cities.

And with lower interest rates that might start nudging Edmonton’s house prices up higher. So probably getting in before that’s a great idea for anybody who is thinking of purchasing over the next six or nine months.

Jay Lewis: Well, that’s awesome. So maybe next time when we meet, Josh, you and I should discuss maybe a different strategy with the different types of mortgages and just sort of hedge our bets then if we’re going to get into it, okay?

Josh Tagg: For sure. We’ll talk about some shorter terms and maybe the variable rates. We’ll have a bit more information. If not next week, maybe over the next couple of videos, we’ll address that as well.

Jay Lewis: Sure. Okay. Well, that’s awesome. Well, thanks for this good news for us here and Look forward to joining again next time Look forward to joining again next time.



Josh Tagg has been the owner of Mortgages For Less since 2006. During that time Josh has developed a reputation for being an industry leader and advocate for client education.


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