Tempered Rate Hike Forecasts for 2019

Marci • December 12, 2018

Floating-rate mortgage holders who had feared the Bank of Canada’s recent full-steam-ahead view towards continued rate hikes can take a breather—at least for now.

The central bank adopted a more dovish stance at yesterday’s rate hold announcement, which confirmed a growing chorus of analysts who now expect the bank to take a slower pace on future rate hikes.

“Recent events aren’t likely to push the bank off of a tightening path, but they do remove any urgency in getting to a neutral policy rate,” wrote Brian DePratto, a senior economist with TD Bank. “We no longer expect the Bank of Canada to hike its policy interest rate in January. Spring 2019 now appears to be the more likely timing, allowing for the bank to ensure that the growth narrative is back on track.”

Just a month and a half earlier, when the BoC hiked rates for the fifth time in 15 months to 1.75%, it made clear its intention to bring rates to a “neutral range” it says is needed to keep inflation in check while not hindering the economy. It estimated that range to be between 2.50% and 3.50%.

The BoC reiterated this intention yesterday, but admitted it may now take longer to get there. “The appropriate pace of rate increases will depend on a number of factors,” the bank’s statement read.

And again this morning, during a speech in Toronto, Governor Stephen Poloz reiterated that the pace of increases will be “decidedly data dependent.”

“We will continue to gauge the impact of higher interest rates on consumption and housing, and monitor global trade policy developments,” he said. “The persistence of the oil price shock, the evolution of business investment and our assessment of the economy’s capacity will also factor importantly into our decisions about the future stance of monetary policy.”

Bond Market Skeptical About Future Rate Hikes

Despite the Bank of Canada’s commitment to higher rates, the bond market is signalling it’s not so sure.

The Canadian 5-year bond yield, which leads fixed mortgage rates, has plummeted to a six-month low.

“The bond market has doubts about the Bank of Canada’s commitment to rate hikes in 2019,” Adam Button, Chief Currency Analyst at ForexLive, told CMT.

“Those doubts turned to outright defiance after [yesterday’s] statement,” he added. “The market is now pricing in fewer than two rate hikes in 2019. Before the BoC statement, the market was looking for a 65% chance of a hike at the January 9 meeting. That’s plunged to 25% and now a hike isn’t fully priced in before mid-year.”

What Does This Mean for Mortgage Rates?

Mortgage rate observers can be forgiven for expecting fixed rates to fall. With a decline in bond yields of this magnitude, that’s what you would normally see.

But Robert McLister, founder of rate-comparison website RateSpy.com, explained that things are different this time.

“Normally we’d have seen at least one bank chop advertised fixed rates by now. But not this time. Banks are purposely padding margins,” he wrote. “On top of this, banks are increasingly building in small premiums to offset the policy/rate-driven slowdown in housing/mortgage growth, late-cycle housing/economic risk, and more stringent capital rules.”

Floating Rates Looking Attractive Again

With inflated fixed rates and the prospect of fewer Bank of Canada rate hikes over the next year, variable and adjustable-rate mortgages are looking more appealing to an increasing share of mortgage shoppers.

Nearly a third of CMHC-insured homebuyers (31%) chose a variable-rate mortgage over a fixed rate in the third quarter of 2018, the housing agency reported last week.

This is the highest share of high-ratio borrowers to choose variable rates since CMHC began tracking these figures. Typically no more than 20% go variable, according to the agency’s historical data.

McLister said the best variable rates for default-insured mortgages are currently around 2.80%, or 3.04% for those who are refinancing.

“That gives you at least a three-rate-hike head start over conventional 5-year fixed rates,” he noted.

This article was written by Steve Huebl and was originally published on the Canadian Mortgage Trends on December 10th 2018.

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Everything You Need to Know About Mortgage Financing in Canada

By Marci Deane • November 5, 2025

For most Canadians, buying a home isn’t possible without a mortgage. And while getting a mortgage may seem straightforward—borrow money, buy a home, pay it back—it’s the details that make the difference. Understanding how mortgages work (and what to watch out for) is key to keeping your borrowing costs as low as possible. The Basics: How a Mortgage Works A mortgage is a loan secured against your property. You agree to pay it back over an amortization period (often 25 years), divided into shorter terms (ranging from 6 months to 10 years). Each term comes with its own interest rate and rules. While the interest rate is important, it’s not the only thing that determines the true cost of your mortgage. Features, penalties, and flexibility all play a role—and sometimes a slightly higher rate can save you thousands in the long run. Key Questions to Ask Before Choosing a Mortgage How long will you stay in the property? Your timeframe helps determine the right term length and product. Do you need flexibility to move? If a work transfer or lifestyle change is possible, portability may be important. What are the penalties for breaking the mortgage early? This is one of the biggest factors in the real cost of borrowing. A low rate won’t save you if breaking costs you tens of thousands. How are penalties calculated? Some lenders use more borrower-friendly formulas than others. It’s not easy to calculate yourself—get professional help. Can you make extra payments? Prepayment privileges allow you to pay off your mortgage faster, potentially saving years of interest. How is the mortgage registered on title? Some registrations (like collateral charges) can limit your ability to switch lenders at renewal without extra costs. Which type of mortgage fits best? Fixed, variable, HELOCs, or even reverse mortgages each have their place depending on your financial and life situation. What’s your down payment? A larger down payment could reduce or eliminate mortgage insurance premiums, saving thousands upfront. Why the Lowest Rate Isn’t Always the Best Choice It’s tempting to chase the lowest rate, but mortgages with rock-bottom pricing often come with restrictive terms. For example, saving 0.10% on your rate may put a few extra dollars in your pocket each month, but if the mortgage has harsh penalties, you could end up paying thousands more if you break it early. The goal isn’t just the lowest rate—it’s the lowest overall cost of borrowing . That’s why it’s so important to look beyond the headline number and consider the whole picture. The Bottom Line Mortgage financing in Canada is about more than rate shopping. It’s about aligning your mortgage with your financial goals, lifestyle, and future plans. The best way to do that is to work with an independent mortgage professional who can walk you through the fine print and help you secure the product that truly keeps your costs low. If you’d like to explore your options—or review your current mortgage to see if it’s really working in your favour—let’s connect. I’d be happy to help.

Bank of Canada Cuts but may have also thrown us a Curveball Oct 29

By Marci Dean • October 31, 2025

Apologies in advance for all the baseball puns! We are fully on the Blue Jay bandwagon over here ad loving every minute of it! Who knew baseball could be so much fun and wow, the strategy!! Very impressed!! As you likely heard, the Bank of Canada took the mound and cut the BOC policy rate to 2.25% which will push prime down to 4.45%. That’s the lowest since mid-2022. This was not a celebratory pitch. It was a damage-control adjustment to help an economy that’s limping between bases. Why the BoC Made the Move Think of the economy as a lineup that’s losing steam: GDP contracted — investment and exports are getting jammed inside Jobs remain soft — hiring is weak, unemployment is climbing Trade uncertainty (especially CUSMA renewal drama) has businesses choking up on the bat Consumers are still swinging , but they can’t win the series alone Inflation Scoreboard Inflation isn’t a shutout, but the score is manageable: CPI hovering near 2–2.5% Core still “sticky” around 3%, but trending lower BoC believes price pressures will cool further in coming innings That gave them the green light to make this cut without risking a walk-off inflation disaster. Forward Guidance = “Don’t Expect Extra Cuts Right Away” Macklem essentially said: If the game plays out as expected, this is the right rate for now. Translation: barring a shock, don’t expect another cut in December. This is likely a pause , not the start of an aggressive easing cycle. Markets agree — odds of another cut next meeting are tiny.

Bank of Canada Rate Announcement Oct 29th, 2025

By Marci Deane • October 29, 2025

Bank of Canada lowers policy rate to 2¼%. FOR IMMEDIATE RELEASE Media Relations Ottawa, Ontario October 29, 2025 The Bank of Canada today reduced its target for the overnight rate by 25 basis points to 2.25%, with the Bank Rate at 2.5% and the deposit rate at 2.20%. With the effects of US trade actions on economic growth and inflation somewhat clearer, the Bank has returned to its usual practice of providing a projection for the global and Canadian economies in this Monetary Policy Report (MPR). Because US trade policy remains unpredictable and uncertainty is still higher than normal, this projection is subject to a wider-than-usual range of risks. While the global economy has been resilient to the historic rise in US tariffs, the impact is becoming more evident. Trade relationships are being reconfigured and ongoing trade tensions are dampening investment in many countries. In the MPR projection, the global economy slows from about 3¼% in 2025 to about 3% in 2026 and 2027. In the United States, economic activity has been strong, supported by the boom in AI investment. At the same time, employment growth has slowed and tariffs have started to push up consumer prices. Growth in the euro area is decelerating due to weaker exports and slowing domestic demand. In China, lower exports to the United States have been offset by higher exports to other countries, but business investment has weakened. Global financial conditions have eased further since July and oil prices have been fairly stable. The Canadian dollar has depreciated slightly against the US dollar. Canada’s economy contracted by 1.6% in the second quarter, reflecting a drop in exports and weak business investment amid heightened uncertainty. Meanwhile, household spending grew at a healthy pace. US trade actions and related uncertainty are having severe effects on targeted sectors including autos, steel, aluminum, and lumber. As a result, GDP growth is expected to be weak in the second half of the year. Growth will get some support from rising consumer and government spending and residential investment, and then pick up gradually as exports and business investment begin to recover. Canada’s labour market remains soft. Employment gains in September followed two months of sizeable losses. Job losses continue to build in trade-sensitive sectors and hiring has been weak across the economy. The unemployment rate remained at 7.1% in September and wage growth has slowed. Slower population growth means fewer new jobs are needed to keep the employment rate steady. The Bank projects GDP will grow by 1.2% in 2025, 1.1% in 2026 and 1.6% in 2027. On a quarterly basis, growth strengthens in 2026 after a weak second half of this year. Excess capacity in the economy is expected to persist and be taken up gradually. CPI inflation was 2.4% in September, slightly higher than the Bank had anticipated. Inflation excluding taxes was 2.9%. The Bank’s preferred measures of core inflation have been sticky around 3%. Expanding the range of indicators to include alternative measures of core inflation and the distribution of price changes among CPI components suggests underlying inflation remains around 2½%. The Bank expects inflationary pressures to ease in the months ahead and CPI inflation to remain near 2% over the projection horizon. With ongoing weakness in the economy and inflation expected to remain close to the 2% target, Governing Council decided to cut the policy rate by 25 basis points. If inflation and economic activity evolve broadly in line with the October projection, Governing Council sees the current policy rate at about the right level to keep inflation close to 2% while helping the economy through this period of structural adjustment. If the outlook changes, we are prepared to respond. Governing Council will be assessing incoming data carefully relative to the Bank’s forecast. The Canadian economy faces a difficult transition. The structural damage caused by the trade conflict reduces the capacity of the economy and adds costs. This limits the role that monetary policy can play to boost demand while maintaining low inflation. The Bank is focused on ensuring that Canadians continue to have confidence in price stability through this period of global upheaval. Information note The next scheduled date for announcing the overnight rate target is December 10, 2025. The Bank’s next MPR will be released on January 28, 2026. Read the October 29th, 2025 Monetary Report