Canada’s job market took a significant hit in March, with 33,000 jobs lost—the largest decline since January 2022. As sectors like manufacturing and auto production suffer, the unemployment rate rose to 6.7%, signaling economic challenges. At the same time, global markets are facing turmoil as the U.S. continues its trade war, further complicating the economic outlook.
After launching steep reciprocal tariffs, markets reacted sharply—stocks tumbled, but bond yields rose, defying the usual pattern. Trump has since paused the tariffs, helping both stocks and bonds rebound somewhat. Still, trade tensions continue to cast a shadow, and uncertainty lingers. The big question now: How will this shape mortgage rates in the days ahead?
If you’re in the middle of a mortgage renewal or looking to buy a home, you’re likely paying close attention to the Bank of Canada’s next moves. The central bank faces a tough balancing act. While inflation remains a concern, economic weakness could encourage rate cuts. However, with inflation still a factor, especially since tariffs are inflationary, these cuts may not come as quickly as many would hope. The next Bank of Canada rate decision is on April 16, with Canadian CPI reported the day before.
Here’s what you need to know to stay ahead of these changes and make smart decisions about your mortgage:
1. Job Losses and Economic Slowdown Could Lead to Rate Cuts
The latest job market downturn puts the Bank of Canada in a tough spot ahead of its next meeting on April 16. With unemployment rising and businesses struggling, there’s pressure for the central bank to act. Some experts predict that if economic conditions don’t improve, we could see rate cuts on April 16, or by the summer. These cuts will bring much-needed relief to those holding variable-rate mortgages or looking to refinance.
2. Inflation Remains a Major Concern
While the weak job market may prompt the Bank to consider rate cuts, inflation is still a significant hurdle, especially with a higher than expected 2.6% reading for February. Inflation is impacting everyday goods and services, which could limit the central bank’s ability to lower rates in the short term. The next inflation report, due on April 15, will provide key insights into whether inflationary pressures are easing or persisting. If inflation remains high, rate cuts may be delayed, making it important for homeowners and buyers to prepare for potential uncertainty. Be sure to get a rate hold if you are considering a fixed-rate mortgage or lock in your discount to prime for variable and adjustable mortgages.
3. Tariffs and Global Economic Uncertainty
Global markets have been tumbling in response to the latest round of U.S. tariffs, which have spurred fears of a global recession. The impact of the U.S.-led tariff war is already being felt in sectors such as manufacturing, with plants like Stellantis pausing production in Windsor. These trade tensions are slowing business investment and deepening uncertainty.
For mortgage holders, this adds another layer of complexity. Tariffs and the resulting global market volatility can slow economic growth, which in turn affects consumer confidence and spending. If the global trade war worsens, the Bank of Canada may be forced to adjust its stance on rate cuts, as economic weakness could push it to reconsider how to balance inflation and recession risks.
Initially, tariff uncertainty led to a drop in bond yields, which can lead to lower fixed mortgage rates. Government of Canada bond yields reached three-year lows, and as a result, lenders reduced fixed-rate mortgages. Those rates were some of the lowest we’ve seen in recent years and provided a window of opportunity for those looking to secure a fixed-rate mortgage. But when reciprocal tariffs took hold, bond yields surged, which ultimately could result in higher rates. Again, lock in your rate!
4. What This Means for Mortgage Holders
If your mortgage renewal is approaching, now is the time to evaluate your options. If rates drop, those with variable-rate mortgages may see lower monthly payments, giving them more financial flexibility. On the other hand, fixed-rate mortgage holders should consider whether locking in a new fixed rate now would offer better long-term security, especially if inflation remains stubbornly high or tariffs continue to disrupt the global economy. This is why you need to talk with an expert like Brampton’s top mortgage broker, Rakhi Madan, so you can make the most informed decision based on your circumstances and risk tolerance.
5. How You Can Prepare
- Stay Informed: Watch for Canada’s March inflation report on April 15, which could influence the Bank of Canada’s decision on April 16. A high inflation reading may push the Bank to hold rates steady.
- Consider Your Mortgage Strategy: If you have a variable-rate mortgage, now might be the time to explore ways to minimize your exposure to future rate hikes. On the flip side, if you’re considering a fixed-rate mortgage, it’s important to lock in sooner rather than later, as inflation concerns and tariff impacts could lead to further rate hikes.
- Refinance if it Makes Sense: If you’re currently carrying high-interest debt or are locked in at a much higher rate, refinancing your mortgage could provide an opportunity to lower your payments and consolidate your debt at that lower rate.
6. What You Should Do Now
In these uncertain times, it’s more important than ever to stay informed and reassess your mortgage strategy. Whether you’re a first-time homebuyer or an experienced homeowner, now is the time to understand how job losses, inflation, and tariffs could shape your financial future.
Working with Rakhi Madan, the most trusted Mortgage Broker in Brampton, can help you navigate these changes and make the best decision for your unique situation. Whether it’s locking in a fixed-rate mortgage before potential hikes, exploring options for a variable-rate mortgage, or strategizing your debt consolidation, Rakhi is here to help you make the best move for your financial future.
Final Thought:
The economic landscape is shifting, and while the Bank of Canada has tough decisions ahead, staying informed and prepared is your best strategy. Let’s talk about how these changes could impact your mortgage—and what you can do to ensure you’re ready for whatever comes next.
Summary:
Canada’s job market suffered a significant downturn in March, with 33,000 jobs lost, and the global economy is facing increased uncertainty due to ongoing U.S. trade tensions and tariffs. While these factors may put downward pressure on rates, inflation remains a major concern for the Bank of Canada, which could delay rate cuts. For mortgage holders, the key is to stay informed about economic developments, including the upcoming inflation report, and to reassess your mortgage strategy. Fixed mortgage rates are currently at their lowest in years, offering a potential opportunity for those shopping for a mortgage. It’s crucial to stay proactive in these volatile times, get a rate hold, and seek guidance to make the best decision for your financial future.
