Employments trends and wages greatly affect the Canadian Mortgage and Housing Corporation’s decisions regarding mortgage rates. As the U.S. and Canadian employment rates continue to improve, there has been talk that mortgage rates might go up come September.
In the U.S., 536,000 full time jobs were added just last month, and average hours worked rose by 0.5%. The stats from Canada are also very encouraging; over the past three months, full time employment has grown by almost 150,000 and average wages have increased 3.4% on a year by year basis. The best news for Canada is that export demands have seen a 6.3% increase just in the last month, fueling further economic growth.
Though these numbers make it seem like a mortgage rate hike is imminent, things aren’t so simple. The Bank of Canada has said that sustainable economic recovery will only be possible when higher export demands are matched by an upsurge in business investment and expansion. In addition, Canada has seen a shift away from full-time work towards more part time work. These factors make it less likely that a mortgage rate increase is imminent.
With regard to the U.S. market, growth in the employment sector is offset by the slow rate of wage growth. The fact that there has been no inflation in average U.S. prices in 2015 might also keep mortgage rates where they are for a little while longer.
Overall, it seems that continued upward movement in the employment sectors of both Canada and the U.S. will ultimately lead to an increase in mortgage rates, though the timing remains to be seen.