Future Mortgage Rates in Peterborough, ON: The "Trump Factor" and What to Expect

As Mike Cara, broker of mortgages, I'm often asked about the direction of mortgage interest rates and what external factors could influence them. In Peterborough, as across Canada, future mortgage rates are heavily influenced by the Bank of Canada's policy rate, which is affected by a complex interplay of domestic and international economic forces. A significant wildcard in this equation is the "Trump Factor" – the potential policies and their ripple effects from a future U.S. administration led by Donald Trump.

Current Landscape and Canadian Rate Forecast

The Bank of Canada (BoC) has recently held its policy rate steady at 2.75% as of June 4, 2025. While some forecasts earlier in the year predicted more aggressive rate cuts, the consensus among many major Canadian banks now suggests a more measured approach. Some anticipate only one to two more cuts by the end of 2025, with rates potentially stabilizing around 2.25% to 2.50%. This is mainly due to inflation decelerating but remaining a concern, and economic growth showing some resilience.

For Peterborough specifically, current best available mortgage rates as of June 18, 2025, are around 3.91% for a 5-year fixed mortgage and 4.05% for a 5-year variable. The Peterborough real estate market has seen some adjustments, with sales dipping and inventory increasing in recent months, but prices have shown some surprising resilience.

The "Trump Factor" and Its Potential Impact

The interconnectedness of the Canadian and U.S. economies means that American political and economic shifts can notably impact Canadian mortgage rates. Here's how a potential second Trump administration could play out:

• Tariffs and Trade Wars: A key policy from the previous Trump administration was the imposition of tariffs. Should similar policies be enacted, making imported goods more expensive, inflationary pressures in the U.S. and Canada could be exacerbated. The US Federal Reserve typically responds to rising inflation by raising interest rates. This, in turn, can influence Canadian bond yields, directly impacting fixed mortgage rates here. While the Bank of Canada might cut rates to offset the economic slowdown caused by tariffs, persistent inflation could limit its ability to do so aggressively.
• Economic Policy Uncertainty: Trump's trade-related policies have historically created significant economic policy uncertainty. This uncertainty can lead businesses and households to postpone investment and spending decisions, potentially slowing economic activity. In such a scenario, investors often seek "safer" assets like government bonds, which can push down bond yields and, consequently, fixed mortgage rates. However, bond yields could rise if markets fear persistent inflation due to expansionary fiscal policies.
• Fiscal Spending and Inflation: A Trump administration might pursue large-scale tax cuts or increased government spending. This could inject significant money into the U.S. economy, potentially fueling inflation. If U.S. inflation rises, it could put upward pressure on U.S. interest rates, which often translates to higher rates in Canada, as international investors compare bond yields between the two countries.
• US Dollar Strength/Weakness: Trump's policies could lead to volatility in the U.S. dollar. While he has favoured a weaker exchange rate, some of his policies could have the opposite effect, making the U.S. dollar too strong. A stronger U.S. dollar can make Canadian exports less competitive, potentially slowing Canada's economic growth and influencing the Bank of Canada's rate decisions.

What Does This Mean for Peterborough Homeowners and Buyers?

For those in Peterborough looking to secure or renew a mortgage, the "Trump Factor" adds another layer of complexity to an already dynamic interest rate environment.

• Increased Volatility: As markets react to policy announcements and shifts from the U.S., we could see greater fluctuations in bond yields and, consequently, fixed mortgage rates.
• Inflationary Pressures: If U.S. policies lead to higher inflation, it could limit the Bank of Canada's ability to cut rates or even necessitate future rate hikes to control domestic inflation.
• Opportunity for Variable Rates (with caution): If trade tensions or economic uncertainty trigger a significant slowdown that prompts the Bank of Canada to cut rates more aggressively, a variable rate mortgage might prove more beneficial in the long run. However, the risk of inflationary pressures and potential rate hikes due to U.S. influence makes fixed rates appealing for those seeking stability.

As a mortgage broker, my advice remains consistent: stay informed, understand your risk tolerance, and consider both fixed-rate and variable-rate options. The best approach will depend on your individual financial situation and outlook on these complex macroeconomic factors. It's crucial to consult with a mortgage professional to navigate these potential shifts and secure a mortgage that aligns with your financial goals.