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Mortgage rates stuck in limbo as bond markets await clear signal

Besides a five-basis-point rise in the three-year insured fixed rate, Canada’s lowest nationally advertised mortgage offers stayed put this week. (A basis point is 1/100th of a percentage point.)

Most rates have been in a holding pattern for weeks as bond markets decide whether the Bank of Canada and U.S. Fed are done lifting rates.

Interestingly, investors are starting to ignore inflationary clues, such as the Bank of Canada’s warning that “inflationary risks have increased” and Thursday’s blockbuster U.S. GDP report. That’s a clue that the bond market is starting to see past this last hurrah for inflation.

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Underlying inflation trends keep slowly improving. In the United States, core PCE inflation – a closely watched inflation metric that’s more comprehensive than CPI – just fell to 2.4 per cent from 3.7 per cent, the slowest since 2020. Core inflation is at a 21-month low on this side of the border.

Growth should keep slowing in the coming quarters. That means, barring another inflation shock (e.g., soaring oil prices), we should see materially lower mortgage rates sometime in 2024.

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Rates were sourced from the Canadian Mortgage Rate Survey on Oct. 26, 2023. We include only providers who advertise rates online and lend in at least nine provinces. Insured rates apply to those buying with less than a 20 per cent down payment or switching a pre-existing insured mortgage to a new lender. Uninsured rates apply to refinances and purchases over $1-million and may include applicable lender rate premiums. For providers whose rates vary by province, their highest rate is shown.

Robert McLister is an interest rate analyst, mortgage strategist and editor of You can follow him on Twitter at @RobMcLister.

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