Benjamin Tal

Variable mortgage rates in Canada could drop below fixed rates now that the Bank of Canada has cut its overnight rate as was widely expected, but scars from past rate swings and wider economic anxieties may keep the housing market muted even if borrowing costs fall further, experts say. CIBC’s Benjamin Tal said that key economic indicators for employment, inflation and housing gave the BoC “the green light” to cut, “not only in September but also I think after.” But he notes the policy rate “is very close to neutral already,” meaning that any rate relief will be modest. Before today’s announcement, markets had largely priced in two cuts, said Ron Butler, a broker. …Tal warns that further declines are unlikely. US deficits, sticky inflation, and Ottawa’s own likely heavy borrowing are all pushing up long-term yields.