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Robert McLister: Donald Trump’s political riffs are quite relevant to mortgage pricing, even on this side of the border
Published Jan 23, 2025 • 1 minute read
Rarely has one man stolen the show in Canada’s interest rate market like Donald Trump did this week. The brash new president, with his tariff threats and regulatory, fiscal and immigration policies, threw bond traders for a loop.
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Given that bond yields steer the ship on fixed mortgage rates, Trump’s political riffs are quite relevant to mortgage pricing, even on this side of the border. The suspense is now on as we await his Feb. 1 encore, in which he promises to reveal Canada’s destiny with U.S. tariffs.
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All that aside, fixed rates remained unchanged this week, except for Nesto’s five basis point drop in its nationally leading insured two-year fixed.
More interesting is the variable-rate market, where discounts from prime rates are getting squeezed. That’s particularly true in the mortgage broker market, for reasons that have to do with mortgage securitization and broker economics.
Suffice it to say, the lowest advertised insured variable rates are in danger of vanishing. That includes Pine’s prime minus 1.10 per cent (4.35 per cent) offer, a rate hotter than a summer sidewalk.
Now, keep in mind that we’re talking about the discount from lenders’ prime rates. Canada’s benchmark prime rate itself is another story. It’s expected to dive 25 basis points on Wednesday and another 25 basis points later this year, according to market-implied forward rate data from CanDeal DNA.
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Of course, Trump’s economically rattling tariff talk could flip this outlook like a pancake.
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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