Weekly Mortgage & Market Update
The Bank of Canada Is Caught Between Two Risks. Here’s What Borrowers Need to Know.
This week the Bank of Canada gave us a clearer look at the thinking behind its July 15 decision. Two forces are pulling in opposite directions. Higher energy costs could keep inflation elevated, while United States trade uncertainty could weaken economic growth. Neither risk has won out yet.
The five year Government of Canada bond yield continued climbing on Thursday morning, reaching an intraday reading of approximately 3.274%. Here is what that means for buyers, renewing homeowners, and variable rate borrowers heading into the BC Day long weekend.
The Bank of Canada Is Balancing Two Competing Risks
The summary of the Bank of Canada’s July deliberations shows that Governing Council focused on two major risks. The first is the possibility that higher oil prices broaden into more persistent inflation. The second is the possibility that United States trade policy slows Canadian economic growth.
The Bank held its policy rate at 2.25% because it expects growth to strengthen while inflation gradually returns toward its 2% target. However, the outlook remains uncertain. If elevated oil prices spread into the prices of other goods and services, the Bank says a monetary policy response could be required. At the same time, new tariffs remain a downside risk to growth.
The September 2 decision will depend on how inflation, employment, growth, energy prices, and trade conditions develop over the coming weeks. A cut is possible, but it is not guaranteed.
Bond Yields Continued Climbing
The five year Government of Canada bond yield rose by approximately seven basis points on Thursday morning to reach about 3.274%. That followed a sharp move higher on Wednesday and increased the pressure on fixed mortgage pricing.
The broader trend matters more than one day of movement. The yield is now approximately twenty basis points higher than it was one month ago. This has reduced the room lenders have to lower fixed mortgage rates and could lead to further pricing changes if the increase continues. The 3.274% figure is an approximate intraday reading and may move before the market closes.
“Bond yields are higher again and are now approximately twenty basis points above where they were one month ago. Arranging a rate hold can reduce unnecessary exposure while you consider your options.”
Kitsilano Could Add 233 Rental Homes
A rezoning proposal at West 2nd Avenue and Vine Street would add approximately 186 market rental homes and 47 below market rental homes in Kitsilano. At least 35% of the proposed units would have two or more bedrooms.
This proposal will not solve Vancouver’s rental shortage by itself, but the inclusion of larger homes is meaningful for families. For renters who are using this period to prepare financially before buying, additional rental supply in established neighbourhoods can provide more interim options.
Canada Plans to Remain a Reliable Energy Supplier
Prime Minister Mark Carney said he does not see value in restricting Canadian energy exports to the United States as a bargaining tool in trade negotiations. The position supports continued energy revenues, jobs, and investment, particularly in Alberta.
The larger trade dispute remains a source of uncertainty. New tariffs could weaken business confidence and economic growth, which is one reason the Bank of Canada continues to watch the data closely.
What This Means for You
If You Are Buying
Bond yields moved higher again on Thursday morning and are approximately twenty basis points above where they were one month ago. Consider arranging a rate hold before you start shopping. Rate holds are subject to lender terms and eligibility, but they can provide protection if rates rise while still allowing us to review available options if rates fall.
If You Are Renewing
The Bank is not signalling an urgent move in either direction. If your renewal is within the next six months, starting early gives us more time to compare lenders, review your amortization, and choose a strategy before your current lender’s deadline.
If You Have a Variable Rate
The July hold was widely expected. The September decision will depend on the next round of inflation, employment, energy, and growth data. Planning around a guaranteed cut or hold would create unnecessary risk.
This Week’s Featured Listing
8689 Cedar Street, Mission, BC
4 Bathrooms
2,809 Square Feet
3 Storeys
No Strata
Basement Suite
This freehold row home offers a flexible family layout without strata fees. The bright main living area includes a large kitchen island, built in wine fridge, walk in pantry, quartz countertops, and stainless steel appliances. Upstairs are three spacious bedrooms, including a primary bedroom with a spa inspired ensuite.
The finished basement includes a media room and a self contained one bedroom suite that may help offset monthly housing costs. The home also includes air conditioning, a heat pump, a fenced yard, a covered patio, and a detached double garage.
| Purchase Price | $920,000 |
| Illustrative Minimum Down Payment | $67,000 |
| Estimated Mortgage Insurance Premium | $35,826 |
| Estimated Total Mortgage | $888,826 |
| Illustrative Rate and Term | 3.99% for 3 Years Fixed |
| Illustrative Amortization | 30 Years |
| Estimated Payment Every Two Weeks | $1,946.66 |
| Income Required to Qualify | Personal Review Required |
This example assumes eligibility for a 30 year insured mortgage and includes an estimated mortgage insurance premium. Eligibility for a 30 year insured amortization is limited, including to qualifying first time buyers and buyers of new construction. Rates, property costs, insurance premiums, rental income treatment, qualification, and lender requirements vary. Closing costs are not included. Contact Rob for calculations based on your circumstances.
View the current listing | View the virtual tour
Alison Stebbings PREC
Sutton Group West Coast Realty
604 302 8442 | alisonlstebbings@gmail.com
What’s On This Long Weekend: July 31 to August 3
The BC Day long weekend offers plenty to enjoy across Metro Vancouver and the Fraser Valley.
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