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Better Mortgage Select Presents: Breaking Interest Rate News - Brought to you by Daniel Patton, Michael Zanzini, Lorenzo Podda, and our President, Dave Butler.
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The Bank of Canada has just announced that it is leaving interest rates unchanged for the sixth consecutive meeting.
At this point, it feels like the same story on repeat:
Canada’s economy remains sluggish.
Unemployment remains elevated.
The housing market—particularly here in Ontario—continues to move at a fraction of the pace we experienced during the 2000s and 2010s.
But inflation remains too high for the Bank of Canada to provide the economy with additional rate relief.
Until something meaningfully changes, there is very little reason to expect the bank’s decision to change either.
| | | | Canada is stuck in a holding pattern...
| | For years, housing construction, home sales and all the industries surrounding real estate created enormous economic activity across Ontario.
Realtors, builders, contractors, mortgage professionals, lawyers, furniture retailers, renovation companies and countless other businesses benefited from a healthy, active housing market.
Today, much of that activity has slowed considerably.
Nothing appears to be collapsing—but very little appears to be accelerating either.
The result is an economy that continues to drift sideways while Canadians adjust to higher mortgage payments, higher living costs and significantly less disposable income.
For many homeowners, a mortgage that was previously based on a rate of 1.99% or 2.19% is now renewing somewhere around 4%.
That difference matters.
The additional mortgage payment does not disappear. It is money that can no longer be saved, invested or spent elsewhere in the economy. It goes directly toward higher interest costs.
That is one reason why the economy can appear relatively steady on paper while many Canadians feel considerably worse off in their day-to-day lives. At BM Select, we see that pressure directly.
We review credit reports, debts, incomes and monthly obligations every day—and have done so for almost 25 years. From where we sit, many Canadian households, and particularly households in Ontario, remain financially stretched.
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Variable rates continue to be a stable option
The Bank of Canada has made only two quarter-point changes to its key interest rate over the last sixteen months.
That means the prime rate and most variable mortgage rates have moved within a relatively narrow range for almost a year and a half now.
Ironically, the variable rate—traditionally viewed as the less predictable product—has become the steadier side of the Canadian mortgage market.
Fixed rates have been considerably more reactive.
They are tied to the bond market, which is constantly repricing geopolitical risk, inflation expectations and oil prices.
Only a few weeks ago, Canadian bond yields were falling, and mortgage lenders began making modest reductions to their fixed mortgage rates.
This week however oil prices have moved sharply higher and bond yields are following.
That does not automatically mean fixed mortgage rates are about to spike. But it has removed much of the immediate pressure for lenders to continue lowering them.
Once again, the fixed-rate market is reminding us how quickly conditions can change.
| | | | What we believe comes next...
A couple economists are beginning to discuss the possibility of modest Bank of Canada rate increases next year if inflation remains persistent.
We understand the argument—but from what we see on the ground, Canada’s economy does not currently appear strong enough to comfortably absorb substantially higher rates.
If inflation does eventually force the Bank of Canada to make a small increase, we believe it could prove temporary unless GDP, employment and household finances improve materially.
For now, the bank remains on hold.
And unless the war, oil prices, trade conditions or the domestic economy change in a meaningful way, there is a strong possibility that future Bank of Canada meetings will deliver more of the same.
That may not make for an exciting headline.
But it does create an environment in which borrowers can plan, protect themselves and make decisions without trying to predict the next dramatic rate move.
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Given the current geopolitical uncertainty, anyone considering taking a fixed interest rate for a mortgage they need in 2026 should plan optimally. We continue to recommend obtaining a 120-day fixed-rate hold whenever possible—even if your current intention is to choose a variable mortgage.
A fixed-rate approval, or even a pre-approval, does not obligate you to use the rate.
It simply protects you.
If fixed rates rise unexpectedly while you are shopping for a home, approaching a renewal or preparing to refinance, you already have a rate secured.
If rates fall, we reassess the market and pursue the better option.
Banks provide these approvals and rate holds at NO COST TO YOU.
Considering how many other banking services seem to come with a charge attached, this is one benefit Canadians should use whenever it is available.
If you have an upcoming purchase, renewal or refinance and would like us to review your options and take advantage of a free 120-day interest rate lock, simply send us an email with the subject: RATE LOCK and one of our mortgage experts will reach out and get you set up.
| | As always — we’ll continue to keep you one step ahead as the data and global landscape evolve.
| | | | Just a friendly reminder to come visit us on our socials, where we put out a ton of videos with tips and information to help you navigate the wild world of mortgages! Check out the links below and give us a follow! | | | | | | | | | | | | As always, if you have any questions or want to do some mortgage planning, feel free to reach out to us at: info@bmselect.ca | | | | | | | |
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