The last few weeks have been busy with economic activity, with key announcements from the Bank of Canada and the federal government. As widely expected, the Bank of Canada held its key borrowing rate at 4.45% after cutting it at the end of October.
Good economic news often leads to bad news for mortgage interest rates. December’s job numbers were the perfect example: Canada’s unemployment rate dropped sharply from 6.9% to 6.5% while the market expected an increase to 7%. The economy added 53,600 jobs when a decrease of –5,000 was expected. On the surface, these numbers dramatically exceeded expectations, pushing bond yields higher and prompting some lenders to slightly increase their fixed-rate offerings.
However, it’s important to note that part-time jobs are driving these gains. November saw an increase of 63,000 part-time jobs, while 9,400 full-time jobs were lost. Over the past two months, Canada has lost 27,900 full-time jobs.
What does this mean for prospective or current homebuyers and mortgage holders?
Mixed signals. Positive and negative data points. Headwinds and tailwinds. And above all: uncertainty. Until the economy shows a clearer direction, rates will likely stay within a relatively tight range. Even so, interest rates remain substantially lower than a year ago.
When choosing between a variable or fixed rate, many factors come into play — risk tolerance, cash flow, and your future plans for the property, to name a few. The right option for someone else isn’t automatically the right option for you. Reviewing your choices in detail matters. Spending just a few extra minutes with us can save you thousands of dollars in interest and potential penalties. This is especially important when renewing with your current lender or using a “discount” lender.
We’re always happy to reconnect for a mortgage review — even if we weren’t the ones who arranged your original mortgage. Reach out to us – we’ll run the numbers, explain your options, and help you make the move that’s best for you.
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