Monday Market Musings: Canadian Mortgage Outlook Amidst Global Shifts

Jamie Ushko • September 9, 2024

As we kick off another week, the financial markets seem deceptively calm. But with key economic data on the horizon, Canadian homeowners and prospective buyers should stay alert. Let's dive into the numbers and see how they might impact your mortgage.



Canada: Charting Its Own Course?

The Bank of Canada has cut rates three times since June 6th, 2024. Interestingly, our dollar has held steady:

  • Current CAD: 0.73681 USD
  • June 5th (pre-cuts): 0.7304 USD

Source: Trading Economics


This resilience suggests the BoC might continue its independent path, potentially leading to more rate cuts that could benefit variable-rate mortgage holders.


U.S. Inflation: A Key Indicator

Wednesday brings crucial U.S. inflation data:

  • Previous: 2.9%
  • Expected: 2.6%

Why it matters: Lower U.S. inflation could influence our mortgage rates. A positive report might signal continued downward pressure on Canadian rates.


Historical Perspective: Market Dips and Rate Cuts

Let's look at past crises and their impact:

  1. Dot Com Bubble (2000-2002):
  • US500 loss: 40%
  • Fed rate drop: 4.75%

  2. Financial Crisis (2007-2009):

  • US500 loss: 52%
  • Fed rate drop: 2.50%

  3. Pandemic (2020):

  • US500 loss: 35%
  • Fed rate drop: 1.50%

  4. Today (Aug 30 - Sept 6, 2024):

  • US500 loss: 4.35%
  • Fed rate change: None yet

Data source: Trading Economics


What this means for Canadian mortgages: If the U.S. holds steady due to minimal market pressure, it might slow the pace of rate cuts in Canada, potentially stabilizing mortgage rates in the short term.


Looking Ahead

Market predictions suggest a 67.5% chance of a 0.25% U.S. rate cut on September 18th, with a 32.5% chance of a 0.50% cut. Fed Governor Christopher Waller has even hinted at supporting a rate cut:

"Considering the achieved and continuing progress on inflation and moderation in the labor market, I believe the time has come to lower the target range for the federal funds rate at our upcoming meeting," Waller stated.

Source: CNBC


What This Means for Canadian Homeowners and Buyers

  1. Variable-rate mortgage holders might see more relief if the rate-cutting trend continues.
  2. Those looking to buy should stay ready – we could see more favorable rates in the coming months.
  3. Fixed-rate mortgage holders should consider talking to a mortgage professional about potential refinancing opportunities.


Remember, while current trends look positive for borrowers, it's crucial to stay informed and consider your unique financial situation. As always, I'm here to help you navigate these changes and find the best mortgage solution for your needs.


Stay tuned for updates as we navigate this eventful week in the financial markets!

Jamie Ushko

Mortgage Broker

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