Mortgage Rates in Limbo as Economy Faces Uncertain Future

In the latest national employment and inflation reports, Canada's job numbers were weaker than expected, with the unemployment rate reaching 6.9 per cent in April, but the overall inflation rate dropped to 1.7 per cent despite core inflation remaining high at 2.9 per cent. The conflicting signals have left the bond markets in a state of flux, with the five-year Canada bond yield rising to 3 per cent for the first time since January, and the likelihood of a BoC rate cut decreasing to 50 per cent from 65 per cent. This uncertain environment makes it crucial for mortgage shoppers to secure a rate hold to avoid potential rate increases.

Key Takeaways:

• The unemployment rate in Canada reached 6.9 per cent in April, which should have led to lower bond yields and expectations of a BoC rate cut.
• The overall inflation rate dropped to 1.7 per cent, but core inflation remained high at 2.9 per cent, and grocery inflation increased to 3.8 per cent.
• The five-year Canada bond yield rose to 3 per cent for the first time since January, and the probability of a BoC rate cut decreased to 50 per cent.
• Mortgage rates can be held for multiple months, depending on the lender, to secure a better deal in case rates increase.
• Ratehub.ca is a mortgage rate comparison marketplace and brokerage that helps Canadians obtain the best mortgage rates.

Statistics:

• Unemployment rate in Canada: 6.9 per cent (April)
• Overall inflation rate: 1.7 per cent
• Core inflation rate: 2.9 per cent
• Grocery inflation rate: 3.8 per cent
• Five-year Canada bond yield: 3 per cent (as of market close on May 22)
• Likelihood of a BoC rate cut: 50 per cent (down from 65 per cent previously)

Sources:

• Ratehub.ca
• Globe and Mail: "Mortgage rates in limbo as economy faces uncertain future"
• Ratehub.ca: "Best mortgage rates"
• Ratehub.ca: "Mortgage rate comparison marketplace"