Big changes are happening in the financial world, and they could impact your mortgage. Here’s what you need to know:
What’s Happening?
The Sahm Rule, a tool used to gauge potential recessions, recently triggered a warning sign. This rule looks at unemployment rates and if they rise significantly from their lowest point, it suggests a recession might be on the way. Last Friday, this indicator was crossed, sparking major market reactions.
How Did the Markets React?
The stock markets took a hit, with the S&P 500 dropping 3%—its biggest drop in nearly two years. The VIX index, which measures market anxiety, spiked sharply. Investors are now expecting the Federal Reserve to cut interest rates by up to 1.25 percentage points this year, which is a significant shift from previous expectations.
What About Canada?
Canadian economists are also adjusting their predictions. BMO Capital Markets now expects the Bank of Canada to respond with faster rate cuts. They’re forecasting reductions at the next four meetings, potentially lowering rates to 3.5% by January and possibly even more by mid-2025.
What Does This Mean for You?
If you’re thinking about a mortgage or have one already, these changes could be good news. Lower interest rates might make borrowing more affordable. Keeping track of these developments can help you make smart decisions about your mortgage and overall financial strategy.
Stay informed and consider talking to a mortgage professional to see how these changes might benefit you!
