If you’ve been watching bond yields closely, you might’ve been caught off guard. While many expected them to head lower, the 5-year Government of Canada bond yield has actually gone up by over 25 basis points in just two weeks.
Here’s the reality check: rates can move in both directions, sometimes when you least expect it.
A Booming U.S. Job Market is Shaking Things Up
Not long ago, the U.S. economy looked like it was cooling down, and markets were predicting aggressive interest rate cuts from the Fed—some even expected a 50-bps cut. But surprise, surprise! The latest U.S. employment numbers came out, and the job market is absolutely booming.
With job growth running hot, the chances of a rate cut are fading fast. In fact, some are even speculating that the Fed might raise rates by 25 bps instead. Now, I’m not saying that’s going to happen right away, but if the next job report looks anything like this one, further rate cuts could be off the table for the rest of the year.
How This Impacts Fixed Mortgage Rates and the Canadian Dollar
Earlier this week, bond yields surged in response to the strong U.S. job numbers, and the Canadian dollar also took a hit. With the likelihood of significant rate cuts by the Fed decreasing, markets are adjusting their expectations.
Speaking of rates, today’s best fixed mortgage rates for insured mortgages are sitting at:
- 5-year fixed: 3.94%
- 3-year fixed: 4.14%
These are the best rates we’re seeing right now, but remember, they can change quickly. If you’re thinking about securing a mortgage, getting a rate hold is always a smart move. Rates are unpredictable, and it’s better to lock something in while you can. If rates go down prior to your closing/renewal date then you can still take advantage of the lower rates available at that time.
Don’t Wait for the Next Bank of Canada Meeting
Now, if you’re thinking about waiting for the next Bank of Canada meeting on October 23rd before locking in a rate, here’s something to keep in mind: the BoC’s decisions typically don’t directly impact fixed mortgage rates. Fixed rates are more influenced by bond yields, which move independently from what the BoC does with the overnight rate. So, if you’re shopping for a rate, there’s no reason to hold off until that meeting. It’s all about timing and being prepared for any shifts in the market.
Key Takeaways:
- The 5-year Government of Canada bond yield has jumped by over 25 basis points in just two weeks.
- Strong U.S. employment numbers have reduced expectations of a Fed rate cut, and bond yields are reacting.
- Today’s best mortgage rates for insured mortgages are 3.94% for a 5-year fixed and 4.14% for a 3-year fixed.
- Don’t wait for the Bank of Canada meeting on October 23rd if you’re looking for a fixed rate—get a rate hold now, because fixed rates don’t hinge on BoC decisions.
In this unpredictable market, locking in a rate gives you peace of mind. So, stay ahead of the game and grab a rate hold while it’s available!
