August 30, 2018

August Rate Outlook

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August provided a mixed bag of news, 54k net new jobs, but a loss of 28k full time jobs, inflation of 1.4% and Mexico and the US signing a Free Trade agreement behind Canada’s back. Given the uncertainly in the Canadian economy, it looks like the number of rate increases are going fewer and father apart, with most banks only expecting only one more late 2018.  The major banks did increase their variable rates to prime – 0.8% (from prime – 0.95%), and monolines are still offering rates as low as low at 2.46% (prime – 1.26%) on insured and insurable mortgages.  Many consumers are taking the variable option with such deep discounts.  I still see the discount offered on variable mortgages to remain flat over the next few months.



Based on a mixed job report, increasing GDP, a trade war with the US and NAFTA slowly quickly going over a cliff the risks to the economy are quietly increasing, and as such bond yields have been flat over the past 30 days. However, the 5 year fixed rates were quick to increase in the first half of 2018 but have not dropped as quickly, and are currently 20bp higher than the start of 2018, thus I expect if yields remain at the current levels there should be no changes over the next few weeks.


Shawn Stillman, CPA, CA
Mortgage Broker
License #M09002648
Mortgage Outlet Inc. #12628
Direct: 416.556.9230