Hot inflation on Tuesday could threaten mortgage rates
The lowest nationally-advertised five-year fixed rates were mostly stable this week.
We did see very slight easing of default-insured fixed rates, however, after bond yields plunged following the attacks in Israel.
Bond investors often buy government bonds for safety during times of turmoil, which keeps a lid on mortgage rates, but it’s too early to say if the crisis in the Middle East will keep rates down for any appreciable amount of time.
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The bigger picture also isn’t pretty with U.S. inflation coming in hotter than expected and weak U.S. bond auctions on Thursday. As often happens, American problems pressure Canadian yields higher. And rates on both sides of the border remain in a longer-term uptrend.
Tuesday is going to be a nail-biter. The Bank of Canada gets a reality check with the much anticipated September inflation report. It likely won’t look any prettier than today’s ugly U.S. data.
That’s bound to put the BoC in a corner, facing a tough decision on whether to hike rates again at its Oct. 25 meeting. If oil prices rebound higher in any significant way, that could be inflationary and drive up inflation expectations – potentially leaving the BoC with little choice.
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Rates were sourced from the MortgageLogic.news Canadian Mortgage Rate Survey on Oct. 12, 2023. We include only providers who advertise rates online and lend in at least nine provinces. Insured rates apply to those buying with less than a 20 per cent down payment or switching a pre-existing insured mortgage to a new lender. Uninsured rates apply to refinances and purchases over $1-million and may include applicable lender rate premiums. For providers whose rates vary by province, their highest rate is shown.
Robert McLister is an interest rate analyst, mortgage strategist and editor of MortgageLogic.news. You can follow him on Twitter at @RobMcLister.
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