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Mortgage Rates Volatile Amid Trade Uncertainty – What It Means for Canadian Borrowers
February 7, 2025 | Posted by: Yelena Markus
Table of Contents
- A Temporary Reprieve, But Uncertainty Lingers
- How US Economic Pressures Could Impact Canada’s Housing Market
- The Direction of Mortgage Rates and Money Markets
- What’s Next for Mortgage Rates?
- How Canadian Homebuyers Can Stay Ahead
- Show More +
A Temporary Reprieve, But Uncertainty Lingers
The recent delay in US tariffs on Canadian and Mexican imports has provided a short-term reprieve, but uncertainty remains. Trade negotiations continue to cast a shadow over economic stability, keeping businesses, investors, and financial institutions cautious.
While this pause avoids an immediate trade conflict, it does little to restore confidence in North American markets. The ongoing risk of policy shifts has a direct impact on inflation, interest rates, and borrowing costs in Canada. Homebuyers and homeowners seeking mortgage solutions should stay informed as the landscape evolves.
How US Economic Pressures Could Impact Canada’s Housing Market
The impact of US trade policies goes beyond tariffs—they influence broader economic trends that directly affect Canadian mortgage rates.
Key Factors at Play:
Inflation & Mortgage Costs: Tariff threats often drive inflation higher. If US inflation surges due to supply chain disruptions, Canadian fixed mortgage rates could remain elevated.
Weakened Business Confidence: The Bank of Canada (BoC) has already lowered its policy rate to 3%, but continued economic uncertainty could lead to further rate cuts to support growth.
Currency Fluctuations: A weaker Canadian dollar increases import costs, which could drive inflation higher and impact the BoC’s ability to cut rates further.
Economic instability in the US often translates to shifts in Canadian borrowing costs. Homebuyers and homeowners should be strategic about their mortgage decisions in the face of potential rate fluctuations.
The Direction of Mortgage Rates and Money Markets
The Bank of Canada is expected to adjust interest rates based on evolving economic conditions. Currently, financial markets are pricing in a potential rate cut at the upcoming policy meeting on March 12th, with additional reductions possible throughout the year.
Market Trends Indicating Rate Changes:
Falling Bond Yields: The Canada 2-year bond yield, which influences fixed mortgage rates, has dropped to its lowest level since 2022—signaling investor expectations for lower rates.
Diverging US & Canadian Policies: While US markets remain stable, Canada’s economic risks are increasing, potentially leading to more aggressive rate cuts.
Central Bank Uncertainty: The BoC must navigate inflation concerns while supporting economic growth, making mortgage rate projections uncertain.
For prospective homebuyers and those looking to refinance, keeping a close eye on these trends is essential for securing the best mortgage rates.
What’s Next for Mortgage Rates?
Mortgage rate movements depend on how the Bank of Canada balances inflation risks with economic growth concerns.
Scenarios That Could Impact Borrowers:
✅ Rate Cuts Are Likely: If economic uncertainty slows growth, further BoC rate cuts could lead to lower variable mortgage rates in Canada.
❗ Fixed Rates May Not Fall as Much: If inflation remains a concern, lenders may tighten fixed-rate mortgage discounts, limiting the potential for major reductions.
Timing Matters: Whether locking in a rate or opting for a flexible mortgage, borrowers should assess market conditions carefully to maximize savings.
How Canadian Homebuyers Can Stay Ahead
As mortgage rates fluctuate, a well-planned mortgage strategy is crucial. Working with an experienced mortgage broker in Montreal, like Yelena Markus, can help borrowers navigate these changes and secure the most competitive mortgage solutions.
Why Choose Yelena Markus?
Expert Guidance: With years of experience in real estate and mortgage brokerage, Yelena provides tailored advice for first-time buyers, investors, and refinancers.
Access to Top Rates: As a mortgage broker, Yelena has access to exclusive lender rates that may not be available to the public.
Market Insights: Stay informed with real-time mortgage rate updates and strategic advice to optimize your borrowing decisions.
With potential rate changes on the horizon, now is the time to evaluate your mortgage options. Whether you're purchasing a home, refinancing, or looking for better terms, contact Yelena Markus today for expert mortgage solutions tailored to your needs.
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