Rate-cut expectations took another hit on Friday after robust job numbers on both sides of the border exceeded forecasts, but variable-rate mortgage borrowers remain undeterred.
Job Data Surprises to the Upside
Canada added an estimated 88,000 new jobs in May, far surpassing analyst predictions. Combined with a rebounding April GDP estimate, this has left recession forecasters rethinking their outlook. In the United States, job creation also doubled expectations, leading futures markets to price in possible rate hikes by December in both countries.
Variable-Rate Demand Holds Strong
Despite the diminished likelihood of a rate cut, demand for variable-rate mortgages remains robust. At Dominion Lending Centres (DLC), Canada's largest mortgage broker, over 52% of prime borrowers opted for a floating rate in May. This trend is particularly pronounced in the insured mortgage segment, where Pine is offering a rate of prime minus 1.10%, equating to 3.35%—the lowest nationally advertised variable rate. It is only surpassed by Butler Mortgage's 3.30% adjustable rate, available in Alberta, British Columbia, and Ontario.
For those concerned about inflation and seeking stability, regional lenders such as Ratebuzz and credit unions still offer three-year fixed rates near or below 4%, which remains the most popular fixed term in Canada.
Robert McLister is a mortgage strategist, interest rate analyst, and editor of MortgageLogic.news. Follow him on X at @RobMcLister.
