Why so many borrowers are ignoring rate hike risk

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Or sign-in if you have an account.A house that's been sold in London, Ont. Photo by Mike Hensen/The London Free Press filesCanada’s economy bounced back this spring. New StatCan data released Friday suggest second-quarter growth near 3.4 per cent annualized, well above the Bank of Canada‘s forecast.THIS CONTENT IS RESERVED FOR SUBSCRIBERS ONLYSubscribe now to read the latest news in your city and across Canada.Exclusive articles from Barbara Shecter, Joe O'Connor, Gabriel Friedman, and others.Daily content from Financial Times, the world's leading global business publication.Unlimited online access to read articles from Financial Post, National Post and 15 news sites across Canada with one account.National Post ePaper, an electronic replica of the print edition to view on any device, share and comment on.Daily puzzles, including the New York Times Crossword.SUBSCRIBE TO UNLOCK MORE ARTICLESSubscribe now to read the latest news in your city and across Canada.Exclusive articles from Barbara Shecter, Joe O'Connor, Gabriel Friedman and others.Daily content from Financial Times, the world's leading global business publication.Unlimited online access to read articles from Financial Post, National Post and 15 news sites across Canada with one account.National Post ePaper, an electronic replica of the print edition to view on any device, share and comment on.Daily puzzles, including the New York Times Crossword.REGISTER / SIGN IN TO UNLOCK MORE ARTICLESCreate an account or sign in to continue with your reading experience.Access articles from across Canada with one account.Share your thoughts and join the conversation in the comments.Enjoy additional articles per month.Get email updates from your favourite authors.THIS ARTICLE IS FREE TO READ REGISTER TO UNLOCK.Create an account or sign in to continue with your reading experience.Access articles from across Canada with one accountShare your thoughts and join the conversation in the commentsEnjoy additional articles per monthGet email updates from your favourite authorsSign In or Create an AccountStill, temporary boosts (oil market quirks, the Census, the World Cup) and renewed U.S. tariff threats have economists expecting no Bank of Canada rate changes through 2026.Markets disagree, pricing a 70 per cent chance the first central bank rate hike lands by December.Either way, none of this is doing anything to stop borrowers from playing variable-rate roulette.SUBSCRIBER EXCLUSIVE: FP West: Energy Insider brings you behind the oilpatch’s closed doors with exclusive insights from insiders every Wednesday morning.By signing up you consent to receive the above newsletter from Postmedia Network Inc.A welcome email is on its way. If you don't see it, please check your junk folder.The next issue of FP West: Energy Insider will soon be in your inbox.We encountered an issue signing you up. Please try againAnecdotal numbers from Canada’s biggest mortgage originator, Dominion Lending Centres Inc., show 54 per cent of prime mortgage borrowers opting for a floating rate in July.The attraction is not exactly mysterious:The lowest variable rates (3.40 per cent or less if insured or 3.70 or less if uninsured) are now more than a half percentage point below the lowest fixed rates.Economists predict no Bank of Canada hikes for several months (for what that’s worth).Average core inflation is just 1.85 per cent, below the two per cent target, despite inflationary oil prices, tariffs and AI investment.Variables let you lock in at will.Breaking one costs just three months’ interest — cheap as far as penalties go.All of this may well be a precursor to Bank of Canada hikes by year-end or in 2027, so risk-averse borrowers should at least weigh a fixed rate or hybrid mortgage (half fixed and half variable), especially if they can find one near or below four per cent.Fixed deals may get scarcer, however, with the five-year bond yield now creeping toward a two-year high.Robert McLister is a mortgage strategist, interest rate analyst and editor of MortgageLogic.news. You can follow him on X at @RobMcLister.For the best national insured and uninsured mortgage rates, updated daily, please visit our mortgage rate page here.This advertisement has not loaded yet.Notice for the Postmedia NetworkThis website uses cookies to personalize your content (including ads), and allows us to analyze our traffic. Read more about cookies here. By continuing to use our site, you agree to our Terms of Use and Privacy Policy.