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Canada’s GDP contracted 0.3% in August. The U.S. government shutdown dragged into day 31. Fed members are publicly divided on rate cuts.

In a normal market, that cocktail of bad news would send bond yields falling. Your mortgage rates would follow.

They’re not.

I’ve been watching this disconnect for months now. Weak economic data keeps rolling in, but the traditional correlation between economic weakness and falling rates has broken down.

The reason matters more than you think.

Canadian fixed mortgage rates are tied to government bonds. And Canadian bonds don’t operate in isolation.

Research from the Bank of Canada shows that U.S. macro news explains up to 25% of quarterly variation in Canadian bond yields. Canadian economic news? Only about 10%.

Your mortgage rate follows American economics more closely than our own GDP numbers.

So when U.S. inflation stays elevated above the Fed’s 2% target and Fed members like Lorie Logan push back against further cuts, Canadian rates stay elevated too. Even while our economy shows recessionary signs.

We’re caught in a cross-border trap. Our economy is weakening, but our rates are being held up by American inflation pressures.

Bank of Canada Governor Tiff Macklem said the current policy rate is “at about the right level” and sits at the low end of neutral range.

That’s central bank language for “we’re probably done cutting.”

Markets heard it too. Rate cut probabilities have dropped to around 30-35% for the next several quarters. The window for lower rates is closing, not opening.

I’ve been doing this since 2013. I’ve seen rate cycles come and go. But the last five years taught me something different.

Rates went up in 2019. Dropped during the pandemic in 2020. Shot back up post-pandemic with inflation. Now back down again.

That’s whiplash. And it changed how I think about mortgage strategy entirely.

I’m not trying to call the market bottom. Nobody can.

Rates love economic surprises. There’s too much we can’t see. Trade wars evolving. Conflicting U.S. data points. Economic uncertainty across the board.

What I can do is protect against adverse outcomes.

Extended rate holds give you 90-120 days of protection. That’s four months where your rate is locked regardless of what happens in the market.

If rates drop, you’re not locked in. You can float down. If rates jump half a percent while you’re waiting to decide, you just saved yourself 1.5% to 2.5% in total interest costs over your next mortgage term.

That’s real money. Thousands of dollars in protection for the cost of a mortgage application.

This strategy works for two groups right now.

Buyers looking for property: A 120-day rate hold protects your budget. You know your maximum carrying cost. You’re not watching rate movements while you house hunt. Your comfort level to buy stays stable.

Renewals coming up: Most lenders only give you a 30-day rate guarantee at renewal. But if you’re willing to switch lenders, you can get a four-month hold instead. That’s meaningful protection if you’re worried about where rates are headed.

Switching lenders requires re-qualification. Your credit gets checked. Your income gets verified. Your property gets reassessed.

It doesn’t make sense for everyone. But if you’re already planning to increase your borrowing or extend your amortization to manage cash flow, you’re going through that process anyway.

Getting ahead of it by four months can be strategic.

If you’re coming off a 2% rate into a 4% environment, your interest rate is doubling. Your payment is probably jumping 20-25%.

That’s a genuine financial shock.

Extending your amortization is the biggest tool you have to control that payment. You can’t control interest rates. You can’t change your borrowing amount unless you have a lump sum to pay down the mortgage.

But amortization? That’s flexible.

You can extend it out when rates are high and cash flow is tight. When rates come down or your income increases, you can accelerate payments and reduce the amortization back down.

It doesn’t have to be forever. It can be a temporary solution while you navigate higher carrying costs.

You have to continuously reassess. That’s active debt management.

People ask me: “Marshall, can’t I just wait another month or two and see what happens?”

You can. But if rates move up half a percent while you’re waiting, you’re paying that higher rate for your entire next term. Three to five years.

The financial impact of not taking protective steps is significant. The work required to protect against it is minimal.

Every client has to assess based on their goals and comfort with the market. But this is what I advise.

The clients who lived through variable rate mortgages over the last five years get this strategy immediately. They’ve felt the whiplash firsthand.

Fixed rate borrowers who rode out the volatility? They don’t see the same value. They were protected by their fixed rate. They don’t have the lived experience of watching their carrying costs swing wildly.

That’s the difference between theoretical risk and felt risk.

I’m not saying rates are going to shoot up suddenly. I’m saying there’s more risk now that we’ve hit the rate floor. And at some point, they could reverse direction.

That could be tomorrow. It could be six months from now. We don’t know.

The question is simple: Is there an action you can take today to protect your outcome?

For most people looking to buy or renewing in the next four months, the answer is yes.

Extended rate holds are that action.