The recent 50-basis-point interest rate cut by the U.S. Federal Reserve is making waves in Canada, with financial experts highlighting its impact on Canadian mortgage rates and the Bank of Canada’s future decisions. Following the Fed’s unexpected move, Canadian bond yields—closely tied to mortgage rates—dropped, leading to notable mortgage rate reductions, including a rare five-year fixed-rate mortgage below 4%.
This drop in bond yields is triggering competitive mortgage offerings, with some lenders offering “exceptional” rates not seen in four years. Experts anticipate that the U.S. Fed’s bold rate cut will give the Bank of Canada room to follow suit in its upcoming decision on October 23, potentially accelerating Canada’s rate-cutting cycle.
With inflation in Canada hitting the central bank’s 2% target ahead of schedule, and rising unemployment, calls for a larger 50-basis-point rate cut in Canada are growing. As homebuyers and mortgage holders benefit from falling rates, financial experts advise Canadians to shop around for the best deals, as many competitive offers may not be publicly advertised.