Welcome to the latest episode of Make Money Count! In this episode, Marcus and Justin share their insights on the latest economic trends, from rising CPI to challenges in the housing market. Get a sneak peek into how these developments impact mortgage and affordability.

Episode Highlights

CPI and Interest Rates: What’s Driving the Trend?

We dive into the recently released CPI data from Statistics Canada, which shows an interesting mix of expected and surprising trends. CPI is rising, mainly due to higher shelter costs like property taxes. Bond yields are climbing, with the 5-year Government of Canada bond hitting 3.166%. These delayed adjustments are now being felt, adding pressure to Canadian households. With the Canadian dollar weakening, what’s the real impact on homeowners and the mortgage market?

Why Variable Rates Make Sense Now

A major focus of the discussion is on mortgage strategies in the current economic climate. Marcus advises viewers to consider variable-rate mortgages over fixed rates. He argues that fixed-rate mortgages lock borrowers out of future rate cuts, which are expected as the economy faces significant headwinds. Marcus stresses the importance of acting quickly, as delays may lead to higher penalties and less favorable terms on new mortgages.

The Condo Market Dilemma

The hosts take a closer look at Canada’s economic challenges, emphasizing that while CPI numbers are important, they are only part of a bigger picture. Key issues include rising unemployment, reduced immigration, and a surplus of unsold condos, all of which could severely impact economic growth. The oversupply in the condo market is particularly troubling. If developers cannot sell units at prices that cover construction costs, future projects may come to a standstill, triggering job losses in the construction industry and related sectors.

Predictions and Implications

Looking ahead, the hosts predict that the Bank of Canada is likely to cut rates by 50 basis points in December, despite recent CPI data. They believe broader economic challenges, such as a cooling labor market and declining demand, outweigh temporary inflationary pressures. They also discuss the possibility of increased productivity as immigration slows and labor force dynamics shift. However, they caution that declining demand could have ripple effects across various sectors.

Watch the Full Episode Now!

Stay tuned for more expert insights in upcoming episodes! And as always, if you have any questions or want to discuss your mortgage options, we’re here to help.