Holders of variable and adjustable rate mortgages rejoice! There will be no rate increases for you at the moment.
I would suspect that this may also lead to a short term drop in bond yields and a reduction in current pricing on fixed-rate mortgages…but this remains to be seen.
If you’re polishing your crystal ball to see where rates are going to go, keep these rules of thumb in mind:
- High dollar slows growth, which relieves inflationary pressures, and keeps rates low. – Lower dollar does the opposite. – High growth, stronger economy, increases pressure on inflation and leads to higher rates. – The Bank of Canada directly impacts variable and adjustable rates, but NOT fixed rates. Fixed rates are linked to bond yields and are much more likely to react FIRST when rates are going to go up or down, because they’re a market indicator and not “central planning”. The markets are always first. If you have a variable and you wait to hear what the Bank of Canada is going to do before locking in, you’ve probably missed your timing window. The key is to watch bond yields for increases or decreases and the spread between those and the associated fixed mortgage rate.
Hope this helps!