In this morning’s scheduled rate announcement, the Bank of Canada left their overnight unchanged for the sixth straight time. This is exactly what was expected and any movement in either direction would have been quite shocking.  

Four of the big six banks have been forecasting a cut by the end of the 2nd quarter, which would come on June 5th, the final scheduled announcement date for that period. 

Will they be right?  

In a press conference following this morning’s announcement, Bank of Canada governor Tiff Macklem stated that a June cut is “within the realm of possibilities”. 

This is definitely positive news!  

It appears that the long-awaited rate cuts may be just around the corner. But remember, nothing is guaranteed, so best not to start counting our chickens just yet.  

 

Good and Bad News on Inflation  

With the most recent Canadian CPI inflation numbers at 2.8% for February, it’s moving in the right direction. (The March inflation numbers are scheduled to be released on April 16th.)  

While things are looking positive on this side of the border, the US seems to be having difficulty getting inflation under control. It rose from 3.2% to 3.5% month over month in the latest CPI inflation report released Wednesday, April 10th. While the US was expecting 1-2 rate cuts by the end of this year, there is now some speculation that they may not cut at all. Time will tell.  

While this is not what the Bank of Canada wanted to hear, they are not going to wait for the US. However, it could influence how aggressive they get with their cuts. Once again, time will tell.  

 

Serious Upward Pressure on Fixed Mortgage Rates  

The uptick in US inflation has triggered a large spike in bond yields, which shot up 5.39% at time of writing. As bond yields are one of the key influencers of fixed rate mortgages, increases are now imminent. In fact, two lenders have already confirmed that they will be increasing their fixed mortgage rates at midnight tonight. I expect more to follow in coming days.  

The last time the bond yields were this high was on December 2nd, 2023. At the time, the lowest 3-year fixed rate for a purchase with 20% down was 5.79%. As of today (Wednesday, Apr 10th), it’s 5.19%. This doesn’t mean that it will be going up to 5.79%, but notable increases are expected.  

 

Conclusion  

Uncertainty is always present, and economists can only speculate based on the information available at the time. As new information is released, rate forecasts will be adjusted accordingly. They are always changing.  

The precise future of mortgage rates is not known. Anything can happen moving forward. As of now, there is serious upward pressure on fixed mortgage rates. But there is nothing to say that this won’t reverse in coming weeks. I’m not saying it will, but anything is possible. Just as it’s possible that the yields could continue to rise, bringing fixed rates along for the ride.  

Anyone with a purchase closing or mortgage renewing within the next 120 days should get a rate locked in ASAP. Any delays could result in a higher rate.  

 

Other relevant blogs:  

Are 3 Year Fixed Mortgages Still Your Best Bet?  

Are Variable Rate Mortgages Now Worth Considering?  

Is a 1 Year Fixed Mortgage Rate Worth the Price?