Canada’s gross domestic product numbers released this week were unchanged from a month prior, but some economists see the impact of the U.S. trade war looming ahead.
Tariff threats and lower immigration will likely limit Canada’s GDP growth to just 1.5 per cent in the coming year, said Bradley Saunders, North America economist with Capital Economics, in a report this week.
There’s a silver lining for mortgage holders with variable rates.
Has the arithmetic on variable vs. fixed mortgages changed? These brokers think so
Mr. Saunders wrote that he expects in 2027, the Bank of Canada will only hike its overnight interest rate twice, to 2.75 per cent, as it balances the risk of inflation with the need to keep the Canadian economy going.
He is one of many economists who believe that rate hikes will be limited in 2027. BoC decisions directly influence the interest that variable-rate holders pay on their mortgages.
However, financial markets show that investors have different opinions.
Explainer: How rising bond yields are affecting Canadian mortgages, inflation and investing
Data from Bloomberg show bond swap markets (which capture investor sentiment on interest rates) currently expect four rate hikes between now and mid-2027, which would bring the headline rate to 3.25 per cent.
Fixed rates have also been steadily increasing, driven by bond yields that have been trading between the 3.6- and 3.7-per-cent level for more than a week.
The upside risk around mortgage rates is part of why TD Economics downgraded its near-term forecast for home sales and valuations.
TD economist Rishi Sondhi said in a report this week that he expects home sales will decline by 5 per cent this year, and that they will remain subdued in 2027.
What do you want to know about mortgages?
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Mortgage rates are sourced by Ratehub.ca. For a comprehensive list of today’s mortgage rates for each term/type, visit ratehub.ca/best-mortgage-rates.
Ratehub.ca is a mortgage-rate comparison marketplace and mortgage brokerage. It helps millions of Canadians compare and obtain the best mortgage rates, credit cards, insurance, deposits and loan products.
Rates shown are the lowest available for each term/type and category (insured versus uninsured) as of market close on Thursday.
