Weak Canadian Jobs Report Eases Pressure on Fixed Mortgage Rates
A second consecutive month of steep job losses and rising unemployment in Canada has reduced expectations for a near-term Bank of Canada rate hike, easing upward pressure on fixed mortgage rates that had climbed roughly 50 basis points since mid-September.
Canada’s labor market recorded steep job losses and rising unemployment for a second straight month, a development that has significantly reduced the odds of a near-term interest rate increase by the Bank of Canada. The weaker-than-expected employment data has eased upward pressure on fixed mortgage rates, which had already climbed by approximately 50 basis points since mid-September.
For mortgage shoppers, current nationally advertised starting rates vary depending on the chosen term and whether the loan is insured or uninsured. A three-year fixed insured mortgage starts at 4.39 per cent, while the uninsured equivalent begins at 4.59 per cent. For five-year fixed terms, advertised starting rates are 4.29 per cent for insured mortgages and 4.79 per cent for uninsured ones. Variable-rate options also reflect this spread, with five-year variable insured mortgages starting at 3.30 per cent and uninsured five-year variable mortgages at 3.64 per cent.
The shift in labor market conditions has altered expectations around the central bank's upcoming policy decisions. Most economists now anticipate that the Bank of Canada will hold its benchmark interest rate steady at its October meeting. However, the prospect of future tightening has not been entirely eliminated. Energy-driven inflation continues to keep the possibility of a rate move alive heading into December.