Canada is technically in a recession if you go by old economics textbooks. But that is a thin reason to start daydreaming about future rate cuts.
Friday's GDP report was skewed by quirky factors in the metals market, and preliminary April growth is looking much stronger. Given that and ample inflation uncertainty, markets are still fully pricing in a Bank of Canada rate hike by year-end, according to derivatives data from London Stock Exchange Group (LSEG). And that may not change unless peace miraculously takes hold in the Persian Gulf and oil gets much cheaper.
Mortgage Market Adjustments
Meanwhile, the mortgage market made a few minor tweaks to leading rates — nothing dramatic. To start with, we saw five-basis-point increases in several of the lowest nationally advertised fixed offers. A five-year fixed now starts at 4.24 per cent uninsured, or near four per cent if insured.
Three-year terms stay the crowd favourite though, going for at least 10 to 20 basis points less than five-year terms if uninsured, and roughly 4.04 per cent and up for insured borrowers.
On the variable side, where interest is picking up after today's recession chatter, multiple banks improved discounts this week by at least five basis points.
Outlook and Key Factors
But keep your eye on Canadian and U.S. core inflation, as they will decide the fate of rate floaters. A U.S.-Iran peace deal provides hope on that front, but guarantees precisely nothing yet.
Robert McLister is a mortgage strategist, interest rate analyst and editor of MortgageLogic.news. You can follow him on X at @RobMcLister.
