How Trump’s Win is Impacting Canadian Mortgage Rates

The recent news of Donald Trump’s win has sent ripples through global financial markets, affecting Canadian mortgage holders and homebuyers. Here’s a breakdown of what this means for the Canadian economy and mortgage rates.

Immediate Market Reactions

Following Trump’s victory, there was a significant surge in equities, crypto markets, and bond yields. This increase in bond yields has led to immediate rate hikes by some lenders. The 10-year Treasury yield jumped to 4.43%, its highest level since July, while Canada’s 5-year Government of Canada bond yield reached a three-month high of 3.11%.

Economic Implications

Trump’s pro-growth policies and tax cut promises have fueled optimism in the U.S. economy, impacting Canada. A healthy U.S. economy is crucial for Canada, but this growth could lead to higher U.S. debt from tax cuts, depressing bond prices and raising yields. This scenario would put upward pressure on fixed mortgage rates.

Impact on Mortgage Rates

Recent rate hikes by lenders, ranging from 5-10 basis points, are just the beginning. If bond yields remain high, further fixed rate increases are expected. Despite expectations of central bank rate cuts, these cuts may not offset the rising fixed rates driven by higher bond yields.

Advice for Homebuyers

Given this complex environment, here are some key points to consider:

• Stay Informed: Keep an eye on economic indicators and policy changes.
• Consult a Professional: Working with a mortgage broker can help you navigate the mortgage market.
• Consider Your Options: Weigh the pros and cons of fixed, variable, and hybrid mortgages to find the best fit for your financial situation.

Risks and Benefits

Canadian banks with U.S. operations may benefit from Trump’s policy shifts, but protectionist policies and tariffs could severely impact Canada’s economy. Increased uncertainty about tariffs and the USMCA could depress capital flows to Canada and weaken domestic investment.

Trump’s win has already started to drive mortgage rate hikes in Canada. By understanding these dynamics and staying informed, homebuyers can make better decisions and secure the best possible mortgage rates.

If you have any questions or need guidance on navigating the current mortgage landscape, feel free to reach out to me, Sandra Forscutt, your trusted Edmonton mortgage broker.