In case you missed the latest episode of ‘As the Crude Barrels Turn,’ the oil market is still defying gravity.
And that matters for mortgage pricing for one simple reason: because the bond market and Bank of Canada say it does.
Oil is currently the top driver of inflation, inflation is the top driver of central bank policy and bond yields, and those are the top two string-pullers for mortgage rates.
Thankfully, two things are tilting in borrowers’ favour.
First, oil has yet to boost underlying Canadian inflation — at least by most official measures. Average core inflation plunged last month, nearly reaching the Bank of Canada’s two per cent goal. One can’t count on that continuing with US$100 oil, but a win is a win.
Second, as these words are being typed, crude futures sit roughly where they closed on March 9, the day President Trump announced his war on Iran “is very complete” and “very far ahead” of his original four- to five-week projected timetable.
That was two and a half months ago, so Trump is right on schedule… by Air-Canada-in-an-ice-storm standards.
All that said, if this war dragging on doesn’t inspire confidence in your inflation outlook and you want to lock in, the news isn’t so bad. The sharpest fixed rates are only 15 to 30 basis points above where they sat when the war began.
There’s still a handful of offers on our rate pages that even start with a three, which also counts as a victory these days.
As for variable rates , slumping core inflation has improved the odds that floating-rate borrowers escape this year without a rate increase. But when you hear experts say “the Bank of Canada is probably not going to hike,” remember that experts also used to say, “the Earth is probably flat.”
Robert McLister is a mortgage strategist, interest rate analyst and editor of MortgageLogic.news. You can follow him on X at @RobMcLister.
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