Rates seem to be on the rise

Recently, we've seen some changes in the market and wanted to take a quick moment to touch base on everyone's favourite topic: mortgage rates.

Over the last month, there has been a dramatic increase in the Canadian 5-year Government Bond. As we send this email, the bond is sitting at 3.677%, compared to 3.342% a month ago. These are the highest levels seen since 2022. 

As many of you know, the 5-year Government Bond influences the 5-year fixed mortgage rates in Canada. Anecdotally, we've seen the 5-year fixed rates increase by roughly 0.35% over the last 4 weeks. 

While we await the September inflation reading, many signs are pointing to it being a 'hot one'. Continued breakdown of trade negotiations with the US and extended conflict in the Middle East have contributed to a significant increase in overall uncertainty. One of the resulting impacts has been the price of oil. 

Gasoline and diesel prices are higher than expected and are staying elevated for longer. The impact has trickled down beyond the sticker shock at the fuel pump to higher transportation and distribution costs, further increasing the overall cost of goods; an impact often felt most by consumers. 

It is up to the Bank of Canada's Governing Council to determine if the increased inflation is temporary or persistent and whether it can be combated by an adjustment to monetary policy (an increase to the policy rate). 

Right now, the odds indicate a ~80% chance there will be a hike at the October 28th meeting. 

So, what can our clients and partners do to arm themselves for this tumultuous time? Be proactive. 

Are you thinking of purchasing in the next handful of months? Call us. We can set you up with a rate hold that's secure for 120 days. 

Do you already have a pre-approval and are still actively shopping? Call us. It may be time to update your documents to refresh your pre-approval and rate hold. 

Is your mortgage coming up for renewal in the next little while? Call us. We can take a look at your renewal offers, gauge if there are better options, and set you up with a rate hold for 120 days. That's right, rate holds are also important for renewals! 

Are bills feeling tighter than they should? Call us. Let's take a look and see if it's worth pulling some equity from your home to let you breathe easier.

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As always, when in doubt, reach out. We're here to help not only answer questions, but talk through potential solutions. 

We hope you have a wonderful fall season, and we'll be crossing our fingers until the next Bank of Canada announcement!

OAC, E&O