The Fed Just Hiked — What It Means for Canadian Mortgages
The Fed raised rates for the first time since 2023 — a unanimous move to 3.75%–4.00%. Cause: sticky inflation plus an oil price shock from the Iran conflict. 16 of 18 Fed officials expect at least one more hike this year.
US impact: The average 30-year fixed is now ~7.4%, up a full point since July. Existing fixed mortgages are untouched — new loans, HELOCs, and variable rates get pricier.
Canada's not off the hook. The BoC held at 2.25% two weeks ago, but fixed rates follow bond yields, not just BoC announcements — and Canada's 5-year yield is already up to 3.42%, tracking US Treasuries near 5%.
Canada's own tug-of-war: Inflation's at 3% (above target), unemployment's at 6.4%, but GDP grew a strong 3.3% last quarter. Hot growth + hot inflation vs. a soft job market — that's the BoC's dilemma heading into its October 28 decision.
BoC hikes → narrows the US gap, likely strengthens the loonie
BoC holds → gap widens, loonie could keep sliding
If you're waiting to buy: nothing here suggests rates are dropping soon. If the numbers work today, waiting for a "perfect" rate might cost you more than locking in now.
Want to know what this means for you? Let’s talk.