I hope you're having a great start to the week! Here’s what’s happening in the mortgage market right now:
Bond Yields at 2-Year Lows – Fixed Rates Could Follow
📉 Bond yields have dropped to their lowest levels since mid-2022, but fixed mortgage rates have not yet decreased. If yields continue to decline, we may see lenders adjust fixed rates downward soon.
📌 Important Consideration: With lower bond yields, fixed-rate Interest Rate Differential (IRD) penalties will likely increase. With a fixed-rate mortgage, it's crucial to understand the potential costs of breaking your term early.
📌 Key Market Rates:
Prime Rate: 5.20%
BoC Policy Rate: 3.00%
Next BoC Meeting: March 12, 2025
Market Expectation: 58% chance of a rate cut (25bps)
⚠️ Trump’s Tariffs: What It Means for Housing & Mortgages
🔺 New tariffs take effect Tuesday:
25% tariff on most Canadian goods
10% tariff on Canadian oil, electricity, and natural gas
🇨🇦 Canada will retaliate with counter-tariffs on $155B in U.S. goods
🔻 Potential Economic Impact on Real Estate & Mortgages
1️⃣ 📉 Recession Risk:
Higher unemployment → mortgage defaults
Possible government intervention (stimulus, mortgage deferrals)
Lenders tightening credit (higher risk premiums on mortgage rates)
2️⃣ 📈 Inflation Surge:
Tariffs could push inflation up by 0.8% in 12 months
BoC may pause/delay rate cuts if inflation rises
Increased rate volatility in the near term
If you have any questions about the current market, interest rates, or your mortgage options, don’t hesitate to reach out. I’m happy to help!
Best,
Matt Parker