Welcome to the latest episode of Make Money Count, where we break down the most important financial news and what it means for you. In this episode, we share insights on the recent CPI numbers, mortgage rate predictions, and the systemic issues surrounding credit penalties and the stress test.

CPI and Interest Rate Forecasts: What’s Next?

The recent Consumer Price Index (CPI) report came in at 1.6%, mostly due to falling gasoline prices. This could mean that the Bank of Canada is planning more interest rate cuts because they are worried about the health of the economy. It’s expected that the Bank of Canada will cut interest rates by 50 basis points in both October and December, with more cuts likely next year. This situation is like trying to control a car that’s hard to steer—these big changes show how unstable the economy has become.

Misleading Mortgage Information

A recent Globe and Mail article suggested that fixed mortgage rates have bottomed out. However, this assessment may be premature. Fixed rates are likely to decrease further as the economy weakens, and locking into a fixed-rate mortgage too soon could prevent borrowers from benefiting from upcoming rate cuts.

Instead, it might be more advantageous to consider variable-rate mortgages, which are expected to drop as the Bank of Canada continues to lower rates to stimulate economic growth. This could be the perfect time to explore flexible mortgage options to take advantage of the lower rates anticipated shortly.

Credit Penalties and the Stress Test

A frustrating issue many borrowers face is the penalty on their credit score when shopping for better mortgage rates. This system, largely set up by Canadian banks, discourages consumers from freely shopping for mortgages, loans, and credit cards.

When combined with the government’s stress test, these practices trap borrowers in unfavorable financial products. What’s worse is that the penalties often affect diligent borrowers—those most concerned about managing their debt responsibly. This system stifles competition and drives up costs, benefiting the banks while consumers lose out.

Why You Should Choose a Mortgage Broker for Better Rates

With competition in the mortgage industry becoming more challenging, working with a mortgage broker is more important than ever. Unlike banks, brokers negotiate better rates for clients, often securing deals that banks won’t offer upfront. Even though banks may try to match rates offered by brokers, turning to mortgage brokers helps maintain healthy competition, which benefits consumers by keeping rates lower.

As the economy faces more uncertainty, it’s crucial to stay informed, be cautious, and make the right choices. Feel free to reach out to us at Cannect for expert guidance on the best mortgage strategy for your situation.

Stay tuned for more updates and insights from the Cannect team in our next episode.