For sale sign outside a Toronto home
Photo: foxmarin.ca

This was the week the two things GTA homebuyers needed most both moved in the wrong direction at once. Canada's economy shed 68,300 jobs in September — the second straight monthly decline — and at the same time, every one of the Big Six banks raised its fixed mortgage rates. Softer jobs, costlier borrowing: that is the combination nobody was hoping for, and it landed just eighteen days before the Bank of Canada's October 28 decision. (Canadian Mortgage Professional, Immigration News Canada)

The jobs numbers, released Friday in Statistics Canada's Labour Force Survey, were a genuine miss. Economists had expected a gain of about 9,200 jobs; instead employment fell 0.3%, pushing the national unemployment rate to 6.5%. Combined with August's 42,000 lost jobs, more than half of the 181,000 jobs gained from April to July have now been wiped out. Young workers took the worst of it — Canadians aged 15 to 24 lost 48,000 jobs, some 70% of September's total decline — while education shed 35,000 positions, health care 23,000, and manufacturing another 13,000. Ontario lost 20,000 jobs of its own, and the share of Canadians working or looking for work slipped to 64.8%, the lowest level outside the pandemic in 29 years. (Money.ca)

Charles St-Arnaud, chief economist at Servus Credit Union, summed up the central bank's bind plainly.

"We think the BoC will keep its policy rate unchanged for the rest of the year, unless there are signs in the CPI data of a broadening of inflation."

— Charles St-Arnaud, chief economist, Servus Credit Union

That is the near-unanimous view among Bay Street economists now: no relief cut on October 28, and probably no move at all through year-end. TD Economics' Andrew Hencic added that the weak report will "pour some more cold water on near-term rate hike expectations" — markets had priced in roughly a one-in-three chance of an October hike, with a December increase still seen as likely. So the policy rate most likely sits at 2.25%, exactly where it has been since last October. Holding, not falling.

Here is the cruel part for borrowers: fixed mortgage rates are not waiting for the Bank of Canada. They follow Government of Canada bond yields, and the 5-year bond hit a 52-week high near 3.73% on September 28. Since early September, all six big banks have raised select fixed rates — CIBC lifted its 1-to-5-year fixed rates by 15 to 20 basis points on October 9, and BMO pushed its standard 5-year fixed to 5.14% two days earlier. As of this week the lowest insured 5-year fixed through broker channels sits around 4.34%, with the 5-year variable near 3.40%. The gap is narrowing, and money markets are pricing roughly 100 basis points of Bank of Canada increases over the next twelve months.

"Bank 5-year fixed rates beginning with five could appear within six to eight weeks."

— Ron Butler, Butler Mortgage

That prediction is aimed squarely at the roughly 1.15 million Canadian mortgages renewing this year — and another 940,000 in 2027. Many of those borrowers locked in at pandemic-era rates near 2 or 3%, and Bank of Canada staff analysis has warned that borrowers renewing in 2025 or 2026 could see payments rise an average of 15% to 20% compared with late 2024. For them, the question isn't whether to buy — it's whether the payment still works.

Pull the two stories together and the picture for the GTA is uncomfortably clear. The one factor that could have revived this fall's frozen market was cheaper borrowing; instead, buyers face job insecurity — the very reason TRREB says sidelined buyers are sitting out — at the same time their mortgage options get more expensive. RBC's Claire Fan cautions against reading too much into one volatile jobs report, noting 70% of September's losses were young seasonal workers and that unemployment remains below last year's level. But the direction of travel is what matters to a household deciding whether to take on a $1-million mortgage: a softer labour market, stickier inflation, and no rate relief in sight.

Three dates will decide what comes next. On October 19, Statistics Canada releases the September inflation reading — the number St-Arnaud says determines whether the Bank holds or hikes. On October 28, the Bank of Canada announces alongside its Monetary Policy Report. And on November 6, we get October's jobs data. For GTA sellers, the message from this week is the same one the data has been delivering all fall: price for the buyers who exist, not the ones who might arrive after rates fall — because the fall in rates keeps not arriving. For buyers and renewers, the window to lock in a rate at today's levels may be narrower than it looks.

That's the market as it stands — we'll be back tomorrow evening with the next round of headlines.

Compiled by the HomesFound team from the reporting linked above.