Canada’s hopes for a July Bank of Canada rate cut took a serious hit after an unexpectedly strong June jobs report. The economy added 83,000 jobs, far surpassing the modest estimate of just 2,000, marking the largest monthly gain so far this year. While about 70,000 of those were part-time roles, many of which are typical summer jobs, the overall boost reversed recent negative momentum in the labour market.
The unemployment rate held steady at 6.9%, slightly better than the 7.1% forecast, and unchanged from May. Meanwhile, hourly wages rose 3.2% year-over-year, down from 3.5% the prior month, showing a modest easing but still solid enough to maintain inflationary pressure.
Breaking down the data further, the private sector added 47,000 jobs, factory work grew by 11,000, and full-time employment for those aged 25 and older rose by 9,000. The 25-to-54 age group saw a new record employment increase of 90,600 outside the COVID rebound period.
Economists caution the data is volatile and may reverse, noting that the full impact of tariffs hasn’t yet been reflected meaning inflation and economic pressures could still build.
This stronger labour market has already moved bond yields higher, with Canada’s 5-year government bond yield surpassing 3% for the first time since January. That move signals rising borrowing costs and was accompanied by a sharp drop in the market’s expectation of a July rate cut.
What does this mean for the housing market?
For current homeowners with variable-rate mortgages, the prospect of an immediate rate drop has faded, so their borrowing costs are likely to remain steady for now. Those considering refinancing or renewing should be prepared for rates to hold or even rise slightly, especially as bond yields influence fixed mortgage rates.
For prospective homebuyers, the window for lower rates is narrowing. Higher bond yields generally translate to higher fixed mortgage rates, increasing monthly payments and reducing purchasing power. Buyers who delay locking in a mortgage might face higher costs, so evaluating options now is important.
Additionally, a resilient labour market with steady wage growth supports housing demand, which can keep prices elevated. However, the looming uncertainty around tariffs and potential economic headwinds could moderate this demand over time.
In short, the June jobs data suggests the Bank of Canada is unlikely to cut rates anytime soon, which will keep borrowing costs elevated and may slow housing market activity. Homeowners and buyers alike should stay informed and flexible in their plans, as the mortgage landscape remains sensitive to evolving economic signals.
If you need more information regarding mortgages or if you need any advice on your personal situation please contact our office at 604-556-3893 or email at alex.kotai@ymscanada.ca.
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