Bond market says interest rate cut by July is pretty much a lock

Robert McLister: Two noteworthy shifts on mortgage battlefield this week, with two key rates falling

Canada’s latest rate-friendly inflation report has markets once again thinking there’s a chance the Bank of Canada will start rolling back rates on June 5.

And we’re not talking about a Lloyd Christmas Dumb and Dumber chance, it’s a decent 55 per cent probability — stronger than your everyday coin toss according to implied rates in the bond market.

The always fickle bond market implies that a cut by July is pretty much a lock. But stay prepared for the unexpected as the Bank of Canada will get a slew of data — including two more inflation reports — before it hands down its next rate verdict.

On the mortgage battleground, there were two noteworthy shifts this week. The lowest nationally advertised insured five-year fixed dipped a tidy 10 basis points (bps) to 4.59 per cent at Citadel Mortgages. More interestingly, its lowest advertised uninsured variable dove a whopping 41 bps to 6.29 per cent.

As usual, shop around. Regional providers are offering even lower variable rates in some provinces, namely Butler Mortgage’s 6.15 per cent — which drops to 6.05 per cent on million-dollar-plus mortgages.