No Rate Change: Jobs, GDP, and What It Means for Your Mortgage
- Simon Bilodeau
- 1 day ago
- 3 min read
The Bank of Canada held its overnight rate at 2.25 percent today, which means the mortgage prime rate stays at 4.45 percent. This was widely expected, but it still matters. The Bank is dealing with mixed signals in the data and wants more clarity before making its next move. Next meeting will be on January 28 2026
Here is what really stands out this week.
Jobs: Strong headline, softer reality
November showed 54,000 new jobs and the unemployment rate fell to 6.5 percent. It looks strong at first glance, but the details tell a different story.
• Almost all the new jobs were part time. Full-time employment barely moved. Over the last three months, part-time work has grown five times faster than full-time work, which usually reflects employer caution rather than strength.
• Most of the gains came from youth aged 15 to 24. Employment for core working-age Canadians, the group that drives housing demand and overall stability, was flat.
• Total hours worked are not improving and wage growth is easing. Taken together, this does not look like a tight or overheating labour market.
Overall, the labour market is softening gently. This supports the Bank of Canada's decision to pause without suggesting that a rate cut is required immediately.
GDP: Growth on paper, not in the real economy
Q3 GDP came in at 0.6 percent and looks like a rebound after the contraction in Q2. The problem is that most of the growth comes from a sharp drop in imports. When imports fall, GDP rises automatically because of how the formula works. It does not mean the economy is strengthening.
Here is what is really happening underneath.
• Imports dropped significantly while exports barely moved. This alone added more than 3 percentage points to GDP. It is an accounting effect, not a true improvement in economic activity.
• Household spending declined for the first time since 2021 and it was one of the largest drops outside the pandemic in nearly two decades. Canadians are clearly cutting back, especially on discretionary items like vehicles.
• One-time government and military purchases boosted the number. Without these, domestic demand would have been negative.
The GDP headline looks strong, but the underlying economy is not. The Bank of Canada knows this, which is another reason they stayed still today.
Bond market reaction
Bond yields moved slightly higher after the jobs and GDP releases, with the two-year Government of Canada yield rising into the mid-2.6 percent range. The reaction was limited. Markets are not convinced that the economy is gaining momentum and still expect slower growth ahead. This keeps fixed mortgage rates from rising too much.
Impact on mortgages
Variable and adjustable rates remain unchanged because the Bank held the overnight rate at 2.25 percent. Payments stay where they are for now.
Fixed rates are influenced by bond yields. With yields drifting slightly higher, lenders may adjust fixed rates modestly upward, but the move should be limited. If economic data continues to weaken, bond yields could fall again, which would pull fixed mortgage rates lower.
For borrowers renewing in 2025, this environment offers more stability. While renewals remain challenging, the backdrop today is far better than it was a year ago.
What I am watching next
• Revisions to GDP and trade data, especially the import numbers that were estimated
• Holiday consumer spending, which will show whether the Q3 softness continues
• Bond yields, which will drive fixed-rate pricing heading into January
Final thoughts
The Bank of Canada’s decision to hold its rate is based on a simple reality. The strong headlines are not supported by strong fundamentals. Part-time job growth and an import-driven GDP boost do not signal real momentum. Until we see consistent strength in full-time jobs, consumer spending, and business investment, rate cuts will come slowly and carefully.
For now, we get stability in the prime rate and only modest movement in fixed rates. It is not perfect, but it is a more comfortable landscape than what Canadians faced earlier this year.
Simon Bilodeau and Gina Lopez
604-828-9864
Simon Bilodeau is a mortgage broker, financial writer, and co-founder of RefinanceBC. He specializes in translating economic trends into clear mortgage strategies for BC homeowners. Often featured on Radio-Canada and CBC, Simon is known for honest, data-driven advice delivered in plain language. He works alongside his wife Gina, forming a bilingual team serving clients across the province.
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