Things Are Moving… But Not Quite Shaking (Yet)
Just as we were all bracing for another gloomy round of economic indicators, Canada's July GDP came in slightly better than expected — and broke a three-month streak of shrinkage. Encouraging? Sure. A turning point? Not really.
The numbers show a modest 0.2% growth in July, helped by a solid performance in goods-producing sectors. It's a welcome surprise, especially after a disappointing June. But a broader look reveals we're still on a slow (some might say 'stall-speed') path. For your mortgage strategy, it's not the growth we need — it's the rate cuts we're watching for.
A Holding Pattern with Shifting Winds
Fixed mortgage rates are holding steady for now. That's largely because Government of Canada bond yields — what fixed rates are based on — have been creeping upwards, but not enough (yet) to push lenders into changing rates. This uptick is being driven by U.S. bond market volatility, itself a reaction to mixed signals from the Fed on when they'll start cutting.
South of the border, Chair Powell recently reminded markets that while inflation is cooling, labour market weakness complicates plans. Translation: rate cuts aren't guaranteed or imminent.
In Canada, even though variable rates got a recent cut — they increasingly look like a sleeper value play. Despite the July GDP rebound, third-quarter growth is tracking at just 0.9% annualized. That's sluggish. And inflation has cooled off enough that we're getting more confident whispers that the Bank of Canada may have room to cut again, sooner than later.
Bottom line: while fixed rates offer predictability and haven't moved much, variable rates are looking increasingly attractive if you can handle a bit of short-term turbulence.
Tip of the Week
Pre-approvals require a hard credit check — and that's OK. A single, normal-course hard pull typically has negligible impact on a healthy score. What hurts is multiple credit applications across different lenders in a short window or high utilization.
Until next time, stay grounded, stay informed — and stay pre-approved.
