Mortgage Market Update: Rates Could Drop + Economic Uncertainty Ahead

As we move into the week, significant developments are shaping the mortgage market. Here’s what you need to know:

✅ Bond Yields at 2-Year Lows – Fixed Rates Could Follow

📉 Bond yields have dropped to their lowest levels since mid-2022, but fixed mortgage rates have not yet decreased. If yields continue to decline, we may see lenders adjust fixed rates downward soon.

📌 Important Consideration: With lower bond yields, fixed-rate Interest Rate Differential (IRD) penalties will likely increase. If you're considering a fixed-rate mortgage, it's crucial to understand the potential costs of breaking your term early.

📌 Key Market Rates:

• Prime Rate: 5.20%

• BoC Policy Rate: 3.00%

• Next BoC Meeting: March 12, 2025

• Market Expectation: 58% chance of a rate cut (25bps)

⚠️ Trump’s Tariffs: What It Means for Housing & Mortgages

🔺 New tariffs take effect Tuesday:

• 25% tariff on most Canadian goods

• 10% tariff on Canadian oil, electricity, and natural gas

• 🇨🇦 Canada will retaliate with counter-tariffs on $155B in U.S. goods

🔻 Potential Economic Impact on Real Estate & Mortgages

1️⃣ 📉 Recession Risk:

• Higher unemployment → mortgage defaults

• Possible government intervention (stimulus, mortgage deferrals)

• Lenders tightening credit (higher risk premiums on mortgage rates)

2️⃣ 📈 Inflation Surge:

• Tariffs could push inflation up by 0.8% in 12 months

• BoC may pause/delay rate cuts if inflation rises

• Increased rate volatility in the near term

📌 What This Means for You If you're actively looking for a home or in the early stages of mortgage financing, now is a key time to review your options. While fixed rates haven’t dropped yet, they could—so staying informed and prepared is crucial.

If you have any questions about the current market, interest rates, or your mortgage options, don’t hesitate to reach out. I’m happy to help!

Stay Informed and Plan Ahead

The mortgage landscape is evolving, and staying ahead of the trends can help you make informed decisions. Whether you're considering buying a home, refinancing, or simply exploring your options, now is the time to assess your strategy.

For expert insights and personalized guidance, reach out anytime!

Matt Parker
📞 778-897-2554
✉️ matt@mattparker.ca

Clear, Simple, and Strategic Mortgage Guidance