Mortgage Blog

Slowing Growth, Rising Inflation – What It Means for Your Mortgage Strategy

August 6, 2025 | Posted by: Simon Lyn

It’s been a bumpy ride in the markets lately, and this week was no exception. Recent U.S. economic data has painted a mixed picture: growth is slowing, but inflation is proving stubborn—leading many to wonder how this will impact interest rates in the months ahead.

The Highlights:

• U.S. Service Sector Stalls: The ISM Services Index—a key measure of U.S. economic activity—came in at 50.1, just barely above the line that separates growth from contraction. Since services make up more than 75% of the U.S. economy, this is a red flag for overall momentum.
• Inflation Not Backing Down: Despite the slowdown, inflation remains sticky. The “prices paid” index—essentially a look at service costs—jumped to its highest level since late 2022. This has markets (and the Fed) on edge, since the ideal scenario is slowing inflation, not rising.
• Bond Yields Push Higher: A weak U.S. Treasury auction, combined with record levels of bill issuance, pushed bond yields up. That matters for mortgage rates here in Canada, as our fixed rates are closely tied to bond market movements.
• Canadian Trade Update: While the U.S. is rethinking trade strategy, Canadian exports to the U.S. actually rose 3.1% in June—even with higher tariffs. Negotiations are expected to stall for now, but the economic relationship remains strong.

What Does This Mean for You?

If you’re carrying a mortgage or planning to get one, this kind of uncertainty is exactly why proactive planning matters. Here’s what we’re helping clients with right now:

• Renewals: Lock in competitive rates early, especially if your term is maturing in the next 6–12 months.
• Refinancing: Access home equity for renovations, investments, or debt consolidation.
• Planning Ahead: Whether you’re buying in the near future or just want to run scenarios, it’s smart to review your numbers before the market shifts again.

Uncertainty doesn’t need to be stressful. With the right advice, you can make confident decisions no matter what the headlines say.

Have questions? We’re always here to help.

— Bespoke Mortgage Group Toronto, ON

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