It’s a mixed bag for mortgage shoppers this week.
The Bank of Canada‘s favourite economic heartbeat monitor, average core inflation, finally dipped below three per cent for the first time in years. That won applause from Governor Tiff Macklem.
The boogeyman is inflation anxiety south of the border. It remains a thorn in our mortgage market’s side, driving U.S. Treasury yields higher. And when U.S. rates rise, it’s like a tractor beam for Canadian rates, given our economic linkages.
Canadian bond yields, which heavily influence fixed mortgage rates, are lurking just below their 2024 high. For fixed-rate seekers needing a pre-autumn mortgage, don’t flirt with Lady Luck. Lock in a free rate hold someplace. Then, hope for more rate-friendly (slower) economic data before the United States Federal Reserve’s and the Bank of Canada’s next rate decisions — which land on May 1 and June 5, respectively.
As it stands, forward rate data from CanDeal DNA show the bond market expecting 175 basis points of Bank of Canada rate reductions in the next few years, starting by July or sooner. There’s a coin flip’s chance of a cut on June 5.
Leading nationally advertised fixed rates remain under five per cent for default-insured borrowers. For example, you’ll find 4.84 per cent on red-hot three-year terms. If you’re rolling without insurance, you’re looking at 5.19 per cent, which still doesn’t break the bank — relative to the alternatives.
On the floating-rate scene, we’re seeing shy improvements. Still, variables won’t start flying off the shelves until borrowers see proof of Bank of Canada rate cuts.
For insured borrowers, however, there’s a sweet deal on adjustable-rate mortgages with leading rates at prime minus 1.30 per cent (5.90 per cent).
Robert McLister is a mortgage strategist, interest rate analyst and editor of MortgageLogic.news. You can follow him on X at @RobMcLister.
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