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19 Jan

The State Of The Rate – January 19, 2024


Posted by: Peter Paley

Any time that we do a State Of The Rate post we like to acknowledge and give many thanks to our industry colleagues who compile data and present us with excellent and concise economic updates.   A big shout-out to Dr. Sherry Cooper Chief Economist for DLCG, Bruno Valko VP of RMG Mortgages, and all of our other fantastic sources of economic information and data.

The first and most important thing to mention today is that 5-YEAR CANADA BOND YIELDS opened high and have been inching up since the new year.  We are expecting mortgage rates to increase SOON!  Today the yield opened over 3.5%, and remember that lenders will set their 5-year fixed mortgage rates approximately 1.5% – 2.5% above the yield.  The variance depends on many factors, insurability, predictions, swaps, volumes, financial institution goals, market share, etc.   This week our mortgage agents have been extremely busy contacting pre-approved clients, renewal clients, and clients who have been sitting on the sidelines to lock in rates in the event they go up.

We are all hoping, wishing,  and willing that the rates will come down.  The next couple of years are going to be the largest mortgage years in almost half a century, Canadian families will be facing larger than anticipated mortgage payments.  Mortgage professionals like us want to have a busy year and many REALTORs hit a bit of a slump at the end of 2023.   We all want rates to come down!

Why are we seeing this increase in bond yields?  The US economy keeps outperforming, inflation is very resilient and the Central Banks (FED and BoC) keep waffling on their interest rate rhetoric.  Good economic news equals bad news for mortgage rates.
Here’s what’s happening:


  • US jobless claims were lower – They were expected at 207,000 and came in at 187,000.
  • US employment numbers were much higher – 164,000 vs the expected 115,000
  • US non-farm payrolls are also up – 216,000 vs the 170,000 expected
  • US unemployment rate; 3.7% vs the predicted 3.8%
  • US core inflation – is up
  • US retail sales, industrial production, manufacturing, all UP, UP, AND UP


  • Unemployment rate – flat
  • Full-time employment – down
  • Part-time employment – is up
  • Core inflation – slightly up
  • Year-over-year inflation – is high
  • Retail sales are slumping

While Canada is slightly struggling in comparison to our neighbour, we are very linked to their performance.   We may feel a squeeze coming in the first part of the year.  The Bank Of Canada will be announcing its next rate decision on January 24, 2024.   We are predicting verdict of “no change” while we wait to see what happens economically.  With it being a US election year, my feeling is that the US economy is going to be in the crosshairs of all American voters and will likely stay strong and robust.  Time will tell.

Contact us for a mortgage rate hold and pre-approval today

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