Trump’s win is already driving mortgage rate hikes in Canada

Some lenders have already made modest rate hikes, adjusting by 5-10 basis points (or 0.05 to 0.10 percentage points) so far.

The news set off a wave of market reactions, sparking a surge in equities, crypto markets and bond yields, which drive fixed mortgage rate pricing in Canada.

For Canadian mortgage holders and homebuyers, the ripple effects were immediate, with some lenders already nudging rates higher. But what does Trump’s win really mean for the Canadian economy—and for those with mortgages?

Trump’s pro-growth policies and tax cut promises are fuelled optimism in the U.S., which is spilling over to Canada.

“Ultimately, a healthy U.S. economy is the single most important factor for Canada, regardless of who is in charge,” noted BMO chief economist Douglas Porter.

Mortgage expert Ryan Sims told Canadian Mortgage Trends that Trump’s presidency will likely “supercharge” the U.S. economy. “Growth and GDP should look to shoot higher without government weighing it down,” he added, suggesting that a more business-friendly climate in the U.S. could fuel economic activity in North America overall.

Sims highlighted the potential downsides: While Trump’s tax cuts may boost growth, they could also balloon U.S. debt—meaning more government bonds hitting the market, which could depress bond prices and raise yields, putting upward pressure on fixed mortgage rates.

On Wednesday, the 10-year Treasury yield surged over 14 basis points to reach 4.43%, marking its highest level since July. Canada’s 5-year Government of Canada bond yield also surged to a three-month high of 3.11

“If yields stay here, expect some fixed rate increases,” Sims said. “The BOC and the Fed may be in cutting mode, but that will likely continue to be in stark contrast to fixed rates.”

Some lenders have already made modest rate hikes, adjusting by 5-10 basis points (or 0.05 to 0.10 percentage points) so far.