Trump's Win: What It Means for Canadian Mortgages!

In case you didn't hear, Donald Trump was elected to be the next US President, and there just may be implications on us here in Canada!

Trump's election victory has already 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 fueling optimism in the U.S., which is spilling over to Canada. A healthy U.S. economy is the single most important factor for Canada, regardless of who is in charge. However, 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 the other hand, Trump's proposed tariffs on imported goods, especially from China, as well as lower tax rates and lighter regulation, could shift interest rate policy in the U.S. as his promised policies risk higher inflation. Higher inflation would mean the U.S. Federal Reserve could be slower to cut interest rates, and markets are already shifting their bets on how low the central bank is likely to go on rates. This could have implications for Canadian rates and the loonie.

As the Bank of Canada works through its own rate cuts to address the cooling economy, it has to keep the U.S. economy and the Fed’s policy in mind. As the value of the Canadian dollar is reduced relative to the U.S. dollar, that is also inflationary, because many things that we import are denominated in U.S. dollars. This means that the Bank of Canada may have to adjust its rate cuts accordingly, which could impact mortgage rates in Canada.

In my opinion, Trump's election victory could lead to more aggressive interest rate cuts from the Federal Reserve, as his administration's policies are expected to stoke economic stimulus. When the U.S. cuts rates, traditionally Canada follows, which means lower mortgage payments in the short term and more people getting into the real estate market. However, the potential for higher inflation and increased U.S. debt could also put upward pressure on fixed mortgage rates in Canada in the longer term.

Unfortunately, what happens in the US does affect us in Canada.   It’s important to think about these developments and how they impact us.By anticipating all the potential implications of Trump’s policies we can present more informed mortgage options and better navigate the market conditions.

Keep smiling and happy house hunting! 🏡😊

Cheers,

Stuart Lessels

Your “Go To” Mortgage Broker for Georgian Bay and beyond

stuart@housenow.ca

(705) 445-1234

Feel free to share this with your clients and colleagues. It’s always good to stay informed and be prepared for what’s coming next in the market! 😊

P.S. If you need any mortgage advice or have any questions, don’t hesitate to reach out. I’m here to help all across Ontario! 🏡📞