Bank of Canada Governor Tiff Macklem is essentially telling anyone betting on a series of rate cuts that they should maybe find something new to hope for.
“Tariffs and the costs of reshaping trade are putting some upward pressure on inflation,” he said in a speech on Thursday, adding that monetary policy does not:
- Address the “loss of efficiency caused by increased trade tensions”
- Change AI adoption
- “Influencing fertility or immigration rates”
“In his view, further cutting interest rates would only lead to excessive inflation as aggregate demand would run up against the economy’s reduced productive capacity,” wrote Desjardins strategist Royce Mendes after watching Macklem’s speech.
For mortgage buyers, this is another indication that the potential interest savings from variable rates may be limited unless a crisis occurs that requires unexpected rate cuts. However, keep in mind that variables come with lower prepayment penalties, if that’s important to you.
Speaking of variables, they’re still about 20 to 30 basis points below leading fixed rates, at least among national lenders. We’re talking just 3.74 percent for the life of your mortgage with Citadel Mortgages, compared to 4.04 percent with Pine Mortgage for a five-year fixed loan.
Some of the reputable regional lenders offer even lower interest rates in some cases, so keep an eye out for them.
And as is tradition, increasing default insurance fees still gives you more than 30 basis points off most uninsured plans.
Robert McLister is a mortgage strategist, interest rate analyst and editor of MortgageLogic.news. You can follow him on X at @RobMcLister.
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