Welcome to the latest episode of Make Money Count! Economic uncertainty is growing across North America, with big changes on the way. Donald Trump’s proposed tariffs and Canada’s Liberal leadership race are shaking up the financial world. For Canadians, these shifts could impact both the housing market and the overall economy—bringing both risks and opportunities.
Episode Highlights
Trump’s Tariffs: What’s at Stake?
Donald Trump has imposed tariffs on Canada – again – and while he’s temporarily spared the auto industry, he’s tying the new tariffs to the fentanyl crisis. Yes, you read that right. The connection may be murky, but the economic fallout is real. With markets spooked and uncertainty rising, it’s safe to say that these policies are creating ripple effects beyond trade.
Rates Are Dropping – Fast
Let’s get into the part that matters most if you have a mortgage or want one. Bond yields are tanking. The five-year Government of Canada bond yield – a key driver of fixed mortgage rates – has fallen significantly, from 3.25% to around 2.6%. That’s a 65 basis point drop.
What does this mean for you?
- If you need a fixed-rate mortgage, the good news: rates are under 4% and still heading lower.
- If you’re up for renewal, or considering buying, variable rates are where it’s at. We’re still seeing Prime minus 70bps, 80bps, and even some Prime minus 90bps for the perfect borrower.
Fixed rates follow bond yields but with a lag. When bond yields rise, mortgage rates jump quickly. When bond yields fall, lenders are… let’s just say, slower to pass the savings along. Funny how that works.
Variable vs. Fixed: What Should You Choose?
We are still a strong advocate for variable-rate mortgages. Why? Because:
- The Bank of Canada is expected to keep cutting rates – possibly 25 basis points at a time.
- There’s a consensus among Canadian banks: rates are going lower, but nobody knows what’s coming next.
Real Estate: A Buyer’s Market Emerging?
With bond yields and mortgage rates falling, you’d expect the real estate market to be heating up, right? Not quite. In the Greater Toronto Area, we’re seeing a 76% year-over-year increase in active listings for February. That’s flood-level supply – and confidence is low thanks to the uncertainty around tariffs. Prices haven’t tanked yet, but this buyer’s market isn’t going anywhere until the tariff threat is off the table.
It’s Not Chess. It’s Not Even Checkers.
The current situation isn’t part of a master plan. It’s knee-jerk policy, and while it’s creating headaches for markets, it’s also creating opportunities for savvy homeowners and investors. If you’re renewing your mortgage or buying a home:
- Consider variable rates to ride the downtrend in rates.
- If you need fixed, know that better deals are coming – but be patient.
In uncertain times, knowledge is power – and right now, understanding how tariffs, bond yields, and mortgage rates connect is your edge. Need guidance on your mortgage renewal or a new home purchase? We’ve got you. Reach out today, and let’s make sure you’re getting the best rate and the right mortgage for your situation.
Have questions? Reach out today for a free consultation and let’s discuss your best options.
Don’t forget to subscribe and follow us on our social media channels for more updates!
