Bank of Canada – April 2025 – NO CHANGE

/in /by
Here are the highlights:

Interest Rate Hold:Bank of Canada held interest rates, maintaining Prime Rate of 4.95%This is the first meeting they’ve held rates since April 2024The total number rate cuts this cycle is at 2.25%.

Economic Indicators:inflation lower than expected at 2.3% for MarchCAD strengthened vs USD over the last month​Consumer confidence at an all time lowHome sales plummeting as tariff concerns remain

Job Market:March report was weaker than expected with negative job growth (0.2%)Layoffs starting in Auto sector as a result of trade warUnemployment up 0.1% to 6.7%

Forecasts:5 of the 6 Big Banks forecast further rate cuts in 2025:0.5% – 0.75%

Next Bank of Canada Meeting:Scheduled for June 4th, 2025https://bbemaildelivery.com/bbext/?p=vidEmbed&id=36024853-8AB1-4FE3-A120-E2ACB4FFCE3A&ar=0&ignore_view=1&videoPlayerId=5d66952e-e212-976d-2301-585a57e910c5

The Bank of Canada held rates this morning.  This is the first time they have not lowered rates since April of last year.
Much of the release this morning highlighted the uncertainty of the trade war, as Trump continues his Mr Miyagi routine of tariff on, tariff off.  Whether you’re a business or individual, it’s tough to stomach deploying capital in an uncertain environment & we’re seeing that follow through in the housing market.  It’s a great time to be a buyer, not so great if you need to sell.  Business confidence, employment, consumer & business spending are all on the decline, & that’s reflected globally with falling oil prices.


The Bank of Canada outlined 2 scenarios with the trade war:High uncertainty but tariffs limited in scope: Growth weakens temporarily & inflation remains on 2% targetProtracted trade war: causes Canada to enter recession & inflation rises temporarily above 3% in 2026Both pills spell trouble for the economy & is likely to result in further cuts throughout the year.

I think what a lot of people don’t understand is that Bank of Canada rate cuts don’t have a direct correlation to fixed rates.  Over the past year they’ve cut rates 2.25% but over that time the 5 year fixed has only come down 1% – 1.5%.  Rate cut don’t mean ALL rates come down. 

The current expectation is that fixed rates might get a bit better this year, rising into next & the range of big bank expectations for Bank of Canada cuts in 2025 (ie: variable rates) range from no further action (<–Scotia is the outlier) to 0.5%-0.75% (everyone else). 
Tiff Macklem, like everyone else, can only wait to see what unfolds but what matters most right now, to you & your mortgage, is having the long-term protection & oversight that we’ve built into our business.

If you have a renewal coming up in the next year, get in touch with us today so we can make sure you don’t miss out on any opportunities.

Bank of Canada Cuts Rates 0.25% – March 2025

/in /by

Here are the highlights:

  • Interest Rate Cut:
    • Bank of Canada cut interest rates by 0.25%, lowering Prime Rate from 5.2% to 4.95%, the seventh consecutive cut.
    • This brings the total rate cuts to -2.25% since June.
  • Economic Indicators:
    • inflation up in Jan from 1.8% to 1.9%
    • inflation expected to uptick to 2.5% in March as reverse effects of GST break take effect
    • ​Trade conflict could lead to weaker GDP & higher prices
  • Job Market:
    • Feb report was weak with no job growth
    • Unemployment holds at 6.6%
  • Forecasts:
    • 5 of the 6 Big Banks forecast further rate cuts in 2025 (tariffs aside):
      • 0.25% – 0.75%
  • Next Bank of Canada Meeting:
    • Scheduled for April 16th, 2025


The Bank of Canada has cut interest rates for the 7th consecutive meeting, bringing down Prime from 5.2% to 4.95% & lowering all variable rate mortgages & lines of credit.  This brings the total number of cuts to 2.25% since they started in June.  Will we get more?

If you ask the big bank economists, the majority say yes, and if the trade war hangs around, we could more than expected.

And so why is that?  Don’t tariffs raise prices & inflation?  Isn’t that what the Bank of Canada was fighting so hard to fix?

Tariffs can certainly impact prices as the cost of imported goods & raw materials goes up, competition gets reduced & supply chains get disrupted.  The 2018 tariff war between the US & China impacted US inflation by the tune of 0.5%.

The bigger concern here at home, though, is the potential impact on growth. Canada has been dealing with a productivity crisis.  To fix that you need business investment & if you’re a business, you’re probably looking to take risk off the table right now & NOT make any major investments.  You’re probably concerned about the impact to consumer spending so are looking to cut costs right now & that can mean job losses, weaker GDP.

If the trade war sticks, our per capita recession will likely turn to AT LEAST a mild overall recession.  Recent falling equity prices & bond yields reflects that expectation.  The looming threat alone will result in weaker North American growth.

So yes, tariffs can lead to higher prices but the bigger concern is a recession, which would lead to lower rates.

That’s it for today.  If you or any friends or family have a mortgage coming up for renewal this year please get in touch so we can make sure you aren’t missing out on any opportunities. 

Bank of Canada cuts rates 0.25% – Jan 2025

/in /by
Bank of Canada Update – 0.25% RATE CUT
REFINANCE OPPORTUNITY (see note at bottom)

Here are the highlights:

Interest Rate Cut: Bank of Canada cut interest rates by 0.25%, lowering Prime Rate from 5.45% to 5.2%, the sixth consecutive cut.This brings the total rate cuts to 2% since June.

Economic Indicators: inflation down in December from 1.9% to 1.8%GST break helped bring inflation down but will have a reverse effect on future monthsCanadian dollar continues to depreciate vs USD​Trade conflict could lead to weaker GDP & higher prices

Job Market: Dec jobs report the best in years91k job gains (40k from public sector)Unemployment drops slightly from 6.8% to 6.7%

Forecasts: 5 of the 6 Big Banks forecast further rate cuts in 2025:range from another 0.5% – 1%Scotia is the outlier seeing no more rate cuts

Next Bank of Canada Meeting: Scheduled for March 12th, 2025
Good morning,

The Bank of Canada has dropped rates by 0.25% at this morning’s rate announcement, the sixth consecutive cut for a total of 2% since they began in June.
Today’s release began with a big disclaimer — all forecasts are out the window depending on what happens with this pending trade war.  All eyes are on the cheeto in chief & what will happen with these threatened tariffs.  
While the short term impact would be inflationary, long term implications would not be good — potential layoffs, reduced spending & economic slowdown would amplify recession concerns.  Over 70% of Canada’s goods & services are sold to the US so some big potential implications here.

On the inflation front, December CPI dropped again from 1.9% to 1.8%.  The GST exemption helped bring down prices but that can setup for the reverse effect on inflation in the coming months.

Onto jobs, the December employment data was a big print & the strongest in years — over 90,000 net new jobs, increase in the employment rate & decrease in unemployment.

In terms of what’s to come in 2025 for rates, 5 of the 6 big banks in Canada are expecting anywhere from another 0.5% – 1% in cuts for the year with Scotia being the outlier calling for no further cuts.
source

REFINANCE ALERT:
​
There is still a sweet spot right now with how mortgage penalties are calculated where ANYONE WHO OBTAINED A FIXED RATE MORTGAGE BETWEEN FALL LAST YEAR TO SPRING can likely refinance into lower rates & save a significant amount of interest.  If you have any friends or family who got a mortgage during that time frame, get in touch before this window of opportunity gets taken away.
The next Bank of Canada meeting is March 12th, 2025.  

For more updates and insights, follow @zupanmortgages on Instagram for daily content.

Bank of Canada JUMBO cut – 0.5%

/in /by

Here are the highlights:

  • Interest Rate Cut:
    • Bank of Canada cuts interest rates by 0.5%, lowering Prime Rate from 6.45% to 5.95%, the fourth consecutive cut.
    • This brings the total rate cuts to 1.25% since June.
  • Economic Indicators:
    • inflation FINALLY within the target range of 2-3% (Sept came in at 1.6%)
    • Employment  still declining on a per capita basis
    • GDP in the back half of 2024 expected to be 1.75%
  • Job Market:
    • Canada gained jobs last month but still not keeping pace with population growth
    • Unemployment is 6.5%
    • ​Young Canadians & newcomers being most impacted by the poor job market
  • Forecasts:
    • Big banks forecast further rate cuts:
      • December rate cut likely
      • Total of 1.25% cuts by the end of 2025.
  • Next Bank of Canada Meeting:
    • Scheduled for December 11th, 2024

Big news out of the Bank of Canadathis morning.  Tiff & his merry band of bankers have followed the US Fed with a 0.5% rate cut.  That brings a total of 1.25% since June & isn’t to be the last.

While a jumbo cut is welcomed news to borrowers, the not so great reality is that they wouldn’t be doing that if things were rock & rolling.

In the release The Bank noted subdued GDP growth in the 2nd half of this year, slightly better for next, but well below the expected 3% global growth.  Declining consumption on a per person basis & soft labour market with unemployment running at 6.5% are clear signs the stifling interest rate environment are too restrictive.

t 6.5% are clear signs the stifling interest rate environment are too restrictive. 

Inflation has finally subsided to fall within the acceptable range with last month’s print coming in at 1.6%, but don’t count inflation totally out for dead.  Commodity prices picked up surrounding the US FED’s somewhat surprising jumbo rate cut last month & bond yields overall being higher than the summer.

There is 1 more rate meeting to close out the year coming up in Dec.  The market is expecting another 1% in cuts by the end of next year.


The next Bank of Canada meeting is ​December 11th, 2024

Bank of Canada Cuts Rates 0.25% – Sept 2024

/in /by
Here are the highlights:


Interest Rate Cut:
-Bank of Canada cuts interest rates by 0.25%, lowering Prime Rate from 6.7% to 6.45%, the third consecutive cut.


Economic Indicators:
-inflation has slowed to lowest level in 3 years at 2.5% annualized 
-Employment declined for the second consecutive month
-Q2 GDP grew by 2.1% annualized with population growth at 3.2% (population growth continues to inflate economic growth).


Job Market:
-Canada has been losing jobs
-unemployment at 6.4%
-recent job reports typical of recession.


Population Growth:
-Canada now ranks among the fastest growing countries for population growth
-Our population grew by a record 1.3million people last year, pressuring infrastructure & house supply


Forecasts:
-Big banks forecast further rate cuts:0.25% – 0.5% in cuts for this year.
-Total of 1.25% – 1.75% cuts by the end of 2025.


Next Bank of Canada Meeting:Scheduled for October 23, 2024
The Bank of Canada has CUT interest rates 0.25% this morning for a third consecutive meeting.  This lowers Prime Rate from 6.7% to 6.45% & directly reduces variable rate mortgages & lines of credit. 


This was widely expected after July’s inflation dropped to the slowest level in 3 years at 2.5% annualized & employment declined for a second consecutive month.
 



The sole blip of good news this summer was the better than expected GDP print for Q2.  The economy grew at an annualized pace of 2.1% for the quarter BUT this was all due to continued record population growth.  We increased the number of Canadians by 3.2% while the economy grew 2.1% – losing ground!





There has been A LOT more interest in variable rates over the summer for obvious reasons.  Prime has dropped by 0.75% since June.  What hasn’t changed though is being able to secure roughly 1% lower rates going fixed. 


With inflation very close to target & the economy slowing, more rate cuts are sure to come BUT how many & the pace is the big question.  This is a nuanced discussion that I LOVE having so if your mortgage is coming up for renewal this year, or you’re looking to buy, get in touch today!







The next Bank of Canada meeting is October 23rd.​

For more updates and insights, follow @zupanmortgages on Instagram for daily content.

Bank of Canada CUTS RATES 0.25% – June 2024

/in /by
  • Bank of Canada cuts rates 0.25%
    ​
  • They have confidence inflation will hit their 2% target
    ​
  • Growth has stalled in Canada with the economy in excess supply
    ​
  • There are 4 remaining meetings in 2024, and economists predict an additional 0.5% (0.75% total) of rate cuts by the end of the year
  • Lowering rates can be a tailwind for real estate prices as a 1% reduction in rates improves buying power by roughly 10%>
  • For more updates and insights, follow @zupanmortgages on Instagram for daily content


Ladies & gentleman, for the first time in 4 years, the Bank of Canada has CUT INTEREST RATES 0.25%. Cigarette anyone? Man, that was not a ride I think anyone wants to go on ever again.

What I find interesting is if you read the release & leave out the part about cutting rates, you’d never guess based on their description they’d be cutting rates. It’s not exactly a stinky description of our domestic & global economy but for variable rate mortgage holders & those with upcoming renewals, this is a big sigh of relief. Side note, but 76% of all mortgages in Canada are going to be renewed in the next 2 years & that was certainly on the Bank of Canada’s radar. I’m seeing more & more mortgages getting renewed with payment jumps of $1k, $2k / month, and that just takes away money you can spend elsewhere in the economy to keep things flowing.

Overall, the Bank sees inflation easing enough that they have confidence it will hit 2% (what could go wrong?) & with growth floundering & the economy in excess supply, they’re making life just a little bit easier. We have 4 remaining meetings in 2024. Big Bank economists are hovering around 0.5% in additional rate cuts by the end of the year for 0.75% total. No guarantees there but that at least gives an idea of what we might see.

So what happens now? Do we see real estate pick up as buyers who’ve been on the sidelines, hoping to buy before rates really drop, start moving to action? 0.25% makes little difference in what people qualify for but if rates get down by, say, 1% by early next year that improves buying power by roughly 10% so all else being equal that’s a tailwind for prices. It’s going to be a bumpy road down, I am sure, but this rate relief is a welcome treat & is sure to spring my oilers to victory. We’ve been focusing more content on our Instagram page @zupanmortgages. Look us up if you don’t already follow, give us a share & let me know how you’re liking the content as we do our best to keep you up to date.

Bank of Canada Rate Announcement – March 2024 – NO CHANGE

/in /by
Good morning,
The Bank of Canada left rates unchanged at this mornings rate announcement.  No major changes to rate cut expectations as consensus is still slating that for June.  There just hasn’t been enough weakness to justify rate cuts & inflation, while coming down, is still not at 2%.
GDP for last year was revised upward to 1.1%, avoiding an official recession, but let’s face it, that has everything to do with the record level of population increase we’ve seen.  You bring in enough bodies, you can juice up demand enough to paint a rosier picture then is reality.
​​​

Mortgage delinquencies in Canada, though still quite low, have risen by more than 50% year over year with Ontario rising 135% & BC 62% over that time frame.  As more mortgages come up for renewal & face the reality of significant payment increases, more Canadians face greater financial stress. 
CPI inflation eased to 2.9% for January but housing related costs are the overwhelming biggest driver of those price increases.

The market is still pricing in 0.75% in rate cuts by the end of this year.  Maybe we get that, but it’s prudent to plan for cuts to start later than expected as that can continues to get pushed out into the future.
If you, or any friends or family, have a mortgage coming up for renewal in the next year, get in touch.  There are specific scenarios where we can find significantly lower rates than what your current lender is offering & these days, every dollar counts.  

Bank of Canada Dec 2023 – NO CHANGE

/in /by

Good morning,


The Bank of Canada has left rates unchanged at this morning’s interest rate announcement.  This wasn’t much of a surprise as inflation has continued to decelerate, , unemployment ticking up & real GDP contracting, all in spite of the positive input of strong population growth.  The government of Canada bond yields, which fixed rates are priced on, have been coming down for the last 3-4 weeks. 

What’s really stood out over the past month were comments by Bank of Canada Governor Tiff Macklem.  Addressing the parliamentary finance committee, speaking about inflation, he commented that the central bank could begin cutting interest rates before inflation is all the way back to target.  Cutting rates BEFORE inflation is back to 2%.

Why does this matter?  Central bankers often use statements to guide markets (remember the, “rates will stay low for a very long time” comment in summer 2020 attempting successfully to get everyone to borrow & spend to juice the economy during covid?). 

After basically 2 years of emphasizing the importance of getting inflation to 2% & all the rate hikes to get there, why the shift?  Why, at this point, start opening the door for rates coming down?  Does the Bank of Canada see a future where it is going to be a very long time before inflation hits 2% with an economy that needs help before then?  Is it a positive thing that rates could be coming down if inflation is high?

The short answer is no.  If rates are coming down while inflation is above target that suggests a pretty dire economic picture.

The reality is we’re in a higher cost of living regime.  When you borrow, you’re pulling demand from the future & the government of Canada total debt surged by 84% in the past 5 years.  54% of that debt is coming due to renew in the next 3 years.  You’re either paying for that through growth, higher taxes, or cutting government spending. 

Now, don’t go buck wild on that comment.  Tiff also said loosening monetary policy is still a ways off, but markets reacted on that nonetheless & are still pricing in cuts as soon as April. 

To counter all that, it should be noted real GDP for Q2 was revised up from a 0.3% drop to 1.4% growth.  The upcoming months were also ones where inflation was coming down at this time last year so it wouldn’t be a surprise to see higher surprises with inflation reports, but for the time being rates are settling down into the Christmas season. 

That wraps 2023 for rate announcements.  Have a very happy holiday season & see you in 2024.

Bank of Canada raises 0.25% – July 2023

/in /by

Good morning,

The Bank of Canada raised rates 0.25% at this mornings rate announcement.  This is the second consecutive increase after the 5 month pause to start the year. With inflation continuing to ease, the downward path has come more from lower than expected energy prices & less from underlying inflation, with core inflation (when you take out fuel & food) remaining persistent in the 3.5-4% range.

It was this point last year where inflation began to decelerate which will make the 2nd half of this year interesting as we will be facing easing comps from 2022.  The Bank expects inflation to settle to 3% for the next year before gradually declining to 2% in the middle of 2025.  

GDP growth is essentially unchanged however expectations for growth has gone up slightly, due to surging population growth.  Canada’s population grew by 1.2 MILLION in the past year as of Q2.  I know this comes up a lot but it’s a staggering number.  ​

As per the Fraser Institute, Canada’s per person GDP is growing at the slowest rate since the 1930s & the Great Depression.  This isn’t healthy, productivity driven growth.  On the individual level we continue to be worse off.  

Unemployment has risen to the highest level since February 2022.  Business outlook has fallen to the weakest since the depth of the pandemic, but the Bank sees consumer price gains held up by high government spending & strong demand.

The question today is, with inflation continuing to come down, with unemployment rising, with GDP negative on a per Canadian basis, why have we now seen 2 hikes since the pause? Mortgage interest costs are adding nearly a single percentage point to CPI.  

The Bank of Canada cannot control immigration.  They can’t build homes & know that rates at these levels hurt housing supply as developers pull projects & sellers hold off in order to hang onto their lower mortgage rates.  

The Bank of Canada raising rates today is a commitment to crushing the economy & demand.  Considering the heavy handed approach we saw when the pandemic hit, urgently dropping rates to basically zero, then the extraordinary move of keeping rates unchanged as inflation marched well beyond their 2% target as their intention was to “let it run hot,” & now the extreme level of rate hikes & unusual move to go back to raising after pausing, can you really envision a scenario where this ends well? 

We know where this is going, everyone knows how much their spending has changed over the last year & a half.  The painful uncertainty is when we will get there & where will rates be when we get there.
Leading into this meeting, CIBC economist Andrew Grantham said in a recent report they think today’s hike will prove the peak & with rates starting to cut around the middle of 2024.  

So, what should you do?  If you’re in a fixed rate mortgage, raise your payments.  Start preparing for higher rates at renewal & paying down more principal to lessen that potential blow waiting down the road.
If you’re in a variable rate, you can lock in to a rate that’s going to be about the same as what you’re in now, if not moderately better, but doing that takes on a significantly higher penalty risk if you break your mortgage early, takes away the ability to benefit when rates do eventually drop & only really pays off if we continue to get more hikes & rates don’t come down.  

If you’re in a fixed payment variable, know that locking in will raise your monthly payments as your amortization will have to get back on track.  If cash flow is the concern, you’re best off raising payments by enough so that you’re continuing to pay off some principal then reevaluating when the rate cycle turns.  At renewal, assuming you have the minimum 20% equity & qualify, you can always refinance up to 30 years to lessen payment shock if rates are still elevated but if you are able to stomach higher payments you will thank yourself down the road by raising by as much as you can handle now.

Make no mistake, you can’t have the level of debt we have as a country, raise rates by this level, and squeak out a soft landing & avoid recession.  Rate hike cycles end in recession. 

If you would like to discuss any of this please get in touch with me today.