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A look at the lowest available mortgage rates on fixed and variable terms and HELOCs this weekSUSANNAH IRELAND/AFP/Getty Images

Markets price in another dose of tough rate medicine

“Higher for longer” is again the buzzphrase in Canada’s rate market. So much for the mini-U.S. banking crisis, which drove rates lower for all of two months.

McLister: Three reasons why mortgage refinances are disappearing and what to do about it

Now we’re dealing with a U.S. debt ceiling mess and persistently disappointing inflation indicators, not the least of which is stubbornly low unemployment. Both those factors have been driving rates higher.

As a result, this past week saw the lowest nationally available:

  • Two-year fixed rates jump 20 bps
  • Three-year insured rate jump 20 bps
  • Four-year insured rate jump 15 bps
  • Five-year uninsured rate jump 20 bps

(Basis points, or bps, are one-100th of a percentage point.)

Another 25-basis-point hike from the Bank of Canada or U.S. Federal Reserve would reinforce that they’re not about to gamble with bringing inflation back down to their 2-per-cent target.

One more hike by both central banks, which the market deems more likely than not, would drive another nail in inflation’s coffin. That could prove valuable insurance. The last thing Canada can afford is inflation — and inflation expectations—re-igniting. That’s a nightmare scenario for central bankers, and it would considerably delay the first rate cut.

If we do get another hike, look for bond yields—which drive fixed mortgage rates—to drop again before long. The more the market believes that central banks are serious about inflation, the sooner rates will fall to their long-run average.

Rates are as of May 25, 2023, from providers that 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 those 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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