Mortgage Blog
Making Sure your Mortgage Fits
US Election Trump Mortgages
November 7, 2024 | Posted by: Simon Lyn
As the U.S. election unfolds with Donald Trump securing a significant win, many Canadians are left wondering how this could impact their financial landscape—specifically when it comes to fixed-rate mortgages. Here’s a breakdown of what Trump’s victory might mean for Canadian mortgage holders and those considering locking in a fixed rate.
The U.S. and Canada share deeply interconnected economies. When significant political shifts occur south of the border, ripple effects are often felt in the Canadian financial markets. Trump’s policies, which previously included tax cuts, deregulation, and a focus on energy independence, could potentially stimulate U.S. economic growth and influence global financial conditions.
Impact on Bond Yields and Interest Rates
Fixed-rate mortgages in Canada are closely tied to government bond yields. Bond yields typically rise when economic growth expectations are strong, as investors move away from the safety of bonds and seek higher returns elsewhere. Under a Trump administration known for pro-business stances and policies that can fuel economic optimism, U.S. bond yields may increase. This can create upward pressure on Canadian bond yields as investors shift their portfolios accordingly.
The Exchange Rate Factor
The Canadian dollar could also experience volatility in response to a Trump victory, especially if U.S. economic policies bolster the strength of the U.S. dollar. A stronger USD often makes Canadian exports more competitive but can lead to inflationary pressures domestically, which in turn could nudge the Bank of Canada to adjust its rate policy.
Potential Rise in Fixed-Rate Mortgages
With higher bond yields comes the likelihood of increased fixed mortgage rates in Canada. For those currently considering securing a fixed-rate mortgage or renewing their term, this may be a crucial time to act. While rates have been relatively low, any persistent upward trend in U.S. financial conditions could lead to higher borrowing costs for Canadians in the near future.
What Should You Do?
If you’re currently weighing your mortgage options, it’s worth keeping an eye on bond market trends and the potential implications of Trump's policies. Consulting with a mortgage broker can provide personalized advice tailored to your situation and help you lock in a rate before any significant shifts occur.
In summary, Trump’s election win may have substantial impacts on Canadian fixed-rate mortgages through rising bond yields and a potentially stronger U.S. dollar. As the situation develops, staying informed and proactive could be key in securing favorable mortgage terms.
If you have any questions or are considering locking in a fixed rate, reach out for expert advice tailored to your needs.
