Canada’s inflation is easing. Here’s what the latest data means for Ontario mortgage rates, buyers, homeowners, and planning ahead.
New inflation data just came out in Canada, and if you’re thinking about buying a home, renewing your mortgage, or keeping an eye on interest rates, it’s worth paying attention. I’m Josh Tagg, a mortgage broker, and here’s what Ontario buyers and homeowners should know.
Core inflation is going up… and down?
One of the most important parts of the latest inflation report is core inflation. This measure strips out items that tend to jump around month to month, like food and energy, so economists can see the underlying trend more clearly.
Core inflation came in below the Bank of Canada’s target for the second month in a row. That’s a strong sign that price pressures are cooling faster than expected. When inflation cools, it reduces the need for interest rates to stay high.
You may have seen headlines saying inflation ticked up to 2.4%. At first glance, that can sound concerning, but the reason matters.
Most of the increase came from food prices. Last year’s temporary GST relief lowered some prices, and those prices are now returning to normal. That’s a one-time adjustment, not a sign that inflation is re-accelerating.
Meanwhile, energy prices dropped sharply, and most other categories showed only modest monthly changes.
Mortgage interest costs finally declined
Mortgage interest costs fell in December for the first time since 2021. That tells us earlier interest rate cuts are starting to work their way through the economy.
It doesn’t mean mortgage payments are suddenly cheap, but it does suggest the worst pressure from rising rates may be behind us.
Inflation targets and expectations
When economists remove volatile items, underlying inflation is now running closer to 1.7%, which is below the Bank of Canada’s 2% target.
Combined with recent data suggesting the economy may have contracted in the fourth quarter, the conversation has shifted. The concern is no longer whether rates need to go higher, but whether rates are now too restrictive for economic growth.
Because of this data, financial markets are increasingly pricing in that the Bank of Canada may need to cut rates by up to half a percent this year to support the economy.
That doesn’t mean rate cuts are guaranteed or that they’ll happen quickly. But it does point to a changing interest rate environment.
What this means for Ontario buyers and homeowners
For homebuyers, this isn’t a signal to rush into a purchase. It’s a reminder to plan carefully. Getting pre-approved, understanding what monthly payments fit your budget, and knowing your options matters more than trying to perfectly time interest rates.
For homeowners, this is a good time to review your mortgage. If you’re renewing soon, considering refinancing, or thinking about accessing home equity, the next 6 to 12 months could offer more flexibility.
The smart move right now isn’t guessing when rate cuts will happen. It’s making sure you’re prepared when they do.
If you want help planning your next step, that’s the kind of conversation I have with Ontario homeowners and buyers every day. Contact me to get started.
