For mortgage rate watchers, it’s still a game of wait & see

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Fixed mortgage rates are still crawling downward. That includes the one- and two-year fixed rates, which have become far more expensive relative to three-, four- and five-year rates.

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Part of that deviation is because the costs lenders pay to fund short-term mortgages haven’t fallen as quickly as for longer terms. Barring an unexpected lender promotion, short-term mortgage rates may not improve significantly until later this fall.

At the moment, markets are waiting for the next indication of central bank direction, particularly from the U.S. Federal Reserve. We might catch wind of that when fed chief Jerome Powell speaks in Jackson Hole next Friday. If he affirms a September U.S. rate cut, we could potentially see bond yields slide and take fixed mortgage rates with them. However, much of the Fed’s easing path is already priced into the market.

In the meantime, it’s the same old game of economic-data monitoring for rate watchers. Anyone pining for lower mortgage rates will want to see Canadian inflation dip further next Tuesday, U.S. core inflation fall on August 29 and a slowing labour market in the U.S./Canadian job report doubleheader on September 6.

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According to the forward rates tracked by CanDeal DNA, markets overwhelmingly expect a drop in Canada’s prime rate in less than three weeks (September 4). Until then, variable rates are going nowhere fast, and leading fixed rates will probably stay within a yawn-worthy 10 to 20 basis points of current figures.

Robert McLister is a mortgage strategist, interest rate analyst and editor of MortgageLogic.news. You can follow him on X at @RobMcLister.

Want to know more about the mortgage market? Read Robert McLister’s new weekly column in the Financial Post for the latest trends and details on financing opportunities you won’t want to miss.

Mortgage rates

The rates displayed below are updated by the end of each day and are sourced from the Canadian Mortgage Rate Survey produced by MortgageLogic.news. Postmedia and Imaginative. Online Inc., parent of MortgageLogic.news, are compensated by certain mortgage providers when you click on their links in the charts.

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