You may have been surprised to see a hit to your investments today, on the heels of a global stock selloff. As Anne Gaviola explains, this has repercussions for people’s portfolios and their mortgages.Canadians gearing up for a run at the fall housing market and existing homeowners with a mortgage renewal looming might seetriggered by weak jobs data in the United States. But that volatility in equities also impacted the bond market, a key driver for fixed mortgage rates.
BMO, too, has accelerated its expectations for rate cuts, now calling for the policy rate to decline by 25 basis points at each of the remaining meetings in 2024, ending the year at 3.75 per cent. CIBC mirrors that call.While the spark for recent market volatility was a downbeat jobs report in the U.S., Reitzes notes that weakness south of the border typically climbs north, as well.
Canada has its own jobs report due out on Friday, with fresh inflation data set for the following week. Snags in the progress of tackling inflation remains the primary risk that could hold the central bank back from more rate cuts, Reitzes says.But he expects signs of more slowness in the labour market and wider economy, which will set up a path to lower interest rates in the months ahead.
It could be two weeks to two months before other fixed rates start to react to changes in the bond market, he notes.Victor Tran, mortgage and real estate expert at Ratesdotca, also said in a release that major lenders are likely to wait until bond yields have stayed lower for some time before changing their posted rates.Tran noted that monoline lenders have adjusted rates by five to 10 basis points already, however.
But he’s also recommending some Canadians look towards the variable rate space right now, where a homeowner’s contract rate can fall in line with Bank of Canada interest rate cuts.How AI is boosting Shopify’s quarterly results
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