Canada’s job market has just sent a shockwave through financial markets, increasing the likelihood of a significant interest rate cut by the Bank of Canada (BoC). Let’s break down what this could mean for your mortgage.
What Happened?
A surprising rise in unemployment to 6.8%—a near-eight-year high outside of the pandemic—has traders predicting that the BoC will cut interest rates by 50 basis points at their upcoming meeting on December 11. Previously, the odds of such a cut were only about 10%, but after this jobs report, market expectations have surged to 80%.
This change comes as the labour market shows signs of cooling. While the economy added 50,500 jobs in November, the labour force grew by over 137,800, causing the unemployment rate to climb. Average wage growth also slowed, marking its weakest pace since mid-2023.
Why Does This Matter?
If the BoC cuts rates by half a percentage point, it could:
- Lower Borrowing Costs: Variable-rate mortgages and home equity lines of credit (HELOCs) may see reduced interest rates, offering potential savings for homeowners.
- Support Homebuyers: Lower rates make borrowing more affordable, which might bring new opportunities for those looking to buy a home.
- Impact Fixed Rates: While fixed-rate mortgages are influenced by bond yields rather than directly by the BoC, the two-year bond yield dropped sharply after the jobs data, signaling potential downward pressure on fixed rates.
What’s Next?
The central bank’s decision on December 11 will be crucial. If you’re considering buying, renewing, or refinancing, this could be a great time to evaluate your options. At TopRankinMortgages, we’re here to help you navigate these changes and make the most of the opportunities they present.
Ready to get started? Contact us today for a free consultation.
