Unexpected Trump win on Canadian mortgage rates and market.

The surprise Donald Trump US election win has caught many off-guard.  The pollsters have been quiet to comment after they all predicted a Clinton win.

Here’s what week 1 looks like, after the Trump win.  The first few days saw some chaos in the stock market.  Stock market went down and so did Govt of Canada bond yields.

However within a day, the stock market began to rise.  The Dow Jones hit all time record highs.  The Toronto market was up also, but not as much as the US.  The Canadian $ took a bit of a beating.  And the Govt of Canada bond yields started to rise.  This last one is important to watch.

Fixed mortgage rates are closely tied to govt of Canada bond yields.  We’ve now seen Bond yields increase by over 0.35%.  that’s a huge increase in such a short period of time.   Banks and Mortgage Lenders have begun to increase fixed mortgage rates.

Investors are betting on Trump stimulating the US economy and taking no foreign prisoners.  That’s caused some jitters in the markets.  I’m watching the markets closely.   This could just be a short term reaction.  Or, it could be an adjustment to the record low mortgage rates.

MY VIEW…  

No reason to panic.   Interest rates have been ridiculously low for several years now.  We have to expect the rates to increase at some point.  This isn’t the end of the world.  Expect to see tons of media headlines of increased rates panic.  And I’m sure you’ll also see all the pundits come out of the woodwork with their ‘end of the world’ predictions.

Let’s put in perspective.  We’re under 3.00%.  Who would have thought under 3.00% would be a ‘bad rate’.?  Never react to small increases or decreases. I’ve been saying this for years.. but in case you didn’t know… Real Estate should be a long term investment. You should plan to buy and hold for 7 years.  It takes around 7 years for your acquisition and disposal costs to amortize and be absorbed and you can usually ride out any ups and downs in the market.

If you are unsure about where you fit in, or if you don’t have a mortgage strategy, contact an experienced mortgage broker for unbiased and professional advice.

Your best interest is my only interest.   I reply to all questions and I welcome your comments.  Like this article?  Share with a friend.

Steve Garganis 416 224 0114 steve@mortgagenow.ca