Canada, U.S. Economy and Tips for Choosing Your Mortgage

Are you keeping a close eye on economic news, but feeling lost among interest rates, employment, inflation, and central bank decisions? Don’t panic! Here’s a simple, clear—and even a little funny—overview (I’ll try my best!) of the current economic situation in Canada and the United States.

Who knows, you might even pick up some practical tips for choosing your mortgage. Let’s dive in!

Despite all the uncertainty around tariffs and upcoming decisions from President Trump, U.S. economic data continues to hold steady. No major crisis in sight… for now.

As The Economist recently summarized:
“The U.S. economy avoids disaster, but worries are piling up.”

In June, the Canadian economy added roughly 83,100 new jobs—well above expectations. Great, right? Yes, but here’s the catch: 70,000 of those jobs are part-time. So, applause… with a small asterisk.
On top of that, average hourly wage growth slowed to 3.2% year-over-year, meaning wage pressure has eased a bit.

Last week, Canadian government bond yields rose, driven by higher U.S. yields and our strong employment report.
Result? Some lenders raised their fixed rates last Friday, and I expect others to follow. In short: fixed rates are trending slightly upward these days.

I don’t think the recent employment numbers will affect the Bank of Canada’s short-term decisions. However, inflation—which new data will be released tomorrow—will likely have an impact. Stay tuned!

Nothing new from my side this week:

• Fixed rates are still below their historical averages.
• The “term premium” (the extra cost for locking in a longer rate) is shrinking, meaning the difference between a 1-year and 5-year term is getting smaller.
• The best 3- and 5-year fixed rates are now roughly equal.
• As for variable rates, I still believe they offer the lowest long-term borrowing costs. But beware, these are turbulent times! Choose a variable rate only if you’re comfortable with potential volatility and your budget can handle a payment increase if my predictions don’t pan out.

Did you know there are two types of variable-rate mortgages?

1. One adjusts your payments with each rate change, up or down.
2. The other keeps your payments fixed, but adjusts the length of your mortgage. This changes how much of your payment goes toward interest versus principal depending on the rate.

(Heads up! If rates rise too much—say about 2%—your fixed payment may need to increase to cover interest. But this is rare and gradual.)

In Short, keep an eye on rates, inflation, and your finances. It’s a bit like a suspense thriller… but your wallet is the one you need to protect!

Note: For a personalized strategy, it’s essential to work with your mortgage broker and financial advisor, as every situation is unique and must be handled on a case-by-case basis.
Note 2: If you don’t have a financial planner, financial advisor, or insurance advisor, give us a call — we know the best!