The U.S. election season often impacts the Canadian economy, especially interest rates. Here’s what you need to know about recent developments and predictions for Canadian mortgage rates.
How U.S. Politics Influence Canadian Rates
Political shifts in the U.S. can lead to economic ripples in Canada, affecting our exchange rate, investment flows, and interest rates. Recently, fixed mortgage rates in Canada have seen a slight uptick, reflecting investor uncertainty. On the other hand, variable rates are expected to dip further, as the Bank of Canada (BoC) predicts lower rates in December to support the economy.
Why Are Fixed Rates Up?
Fixed mortgage rates in Canada are largely influenced by bond yields, which have risen due to U.S. economic signals. When markets feel uncertain about the U.S. political landscape, it can lead to higher bond yields and, consequently, higher fixed rates here in Canada.
What About Variable Rates?
The BoC’s stance on variable rates could be different. Variable rates often mirror the BoC’s overnight rate, which some analysts predict could see a cut in December. This potential cut is in response to economic gaps between Canada and the U.S., aiming to increase borrowing and spending in Canada.
What Should Homeowners and Buyers Expect?
If you’re considering a new mortgage or renewing an existing one, it’s essential to understand these dynamics. Fixed rates may remain elevated due to U.S. influences, but variable rates might offer a lower-cost option in the short term, with potential BoC cuts on the horizon.
Stay Informed
Staying updated on these developments is crucial. The BoC’s next interest rate announcement is scheduled for December 11, 2024. According to a recent article, “The Bank of Canada is expected to implement a significant half-point rate cut, reducing the policy rate to 3.75% following three previous reductions, in response to inflation falling below its 2% target and a sluggish economy.”
Contact Us
If you’d like to explore the best mortgage option for you, reach out at 416-882-4172 or email mortgages@dannycardoso.ca