That economic softening has been driven in part by trade uncertainty with the United States, keeping the BoC\u2019s overnight rate lower than earlier projections expected and providing modest relief to renewing borrowers.<\/p>\n
\u201cI think it\u2019s a little bit of a silver lining of the international situation that interest rates, and hence mortgage rates, are a little bit lower than where we were forecasting,\u201d ab Iorwerth said. \u201cIf the economy had been going gangbusters, the interest rates at which households would have been renewing their mortgages might have been quite a bit higher.\u201d<\/p>\n
Canadians\u2019 rate sensitivity on the rise<\/p>\n
A byproduct of the current market, though, is the reality that the sensitivity of Canadian households to interest rates has increased, according to ab Iorwerth \u2013 partly because of a wider move toward variable rates or shorter-term fixed-rate mortgages.<\/p>\n
That means any unexpected rise in borrowing costs, whether driven by a resurgence in inflation, a trade shock, or instability in global oil markets, could transmit more quickly through the mortgage system than it might have a decade ago.<\/p>\n