These four factors will determine if mortgage rates will keep drifting lower

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Mortgage rates are tiptoeing into the new year on a quiet note. Only one leading rate has changed in the last two weeks, which is not uncommon in the slow holiday season. That rate is the uninsured four-year fixed, which dipped five basis points since our last report.

Bond markets, the merry puppeteers of fixed mortgage pricing, remain in wait-and-see mode. Traders await four revelations this month:

1. What trade and fiscal policies Trump orders post-inauguration;
2. What the Bank of Canada and the United States Federal Reserve do at their Jan. 29 meetings;
3. What next week’s employment reports reveal; and
4. How inflation evolves later this month.?

A combination of the above will help determine if Canadian mortgage rates continue their downward drift.

Meanwhile, for most new borrowers with stable provable income and solid finances, snagging a three-year fixed in the low fours is the sweet spot. Three-year terms provide a balanced risk-reward trade-off, are priced lower than other terms, and entail less prepayment penalty risk than longer fixed mortgages.

?Robert McLister is a mortgage strategist, interest rate analyst and editor of MortgageLogic.news. You can follow him on X at @RobMcLister.??

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This table reflects the prevailing rates at the time this story was published. For the best mortgage rates in Canada right now, click here.