Fifteen months into this harrowing tightening cycle, Canada's real (inflation-adjusted) policy rate is "unequivocally in positive territory." That was BMO Economics' assessment after last week's BoC hike.

Real rates are hard for most to wrap their heads around, but they matter. For one thing, when interest rates are meaningfully above inflation, savers enjoy rising purchasing power. In other words, people's returns outpace price level increases. That creates an incentive to save instead of spend.

At the same time, businesses are less inclined to invest in things like buildings and equipment—because interest expense is so high relative to their revenue potential.

With the BoC tightening the noose on borrowers again, "real rates" are even more positive. This phenomenon is slowing our economy more and more, getting us closer and closer to the disinflation we seek. To quote Axl Rose once again, all we need is just a little patience.

Canadian housing affordability is just about the worst ever.

That's especially problematic for first-time buyers who:

• can barely scrape together the minimum 5% to 7.5% down payment
• have strong credit and solid employment
• have debt ratios above the 39% #GDS#/ 44% #TDS# insurer limits
• can't pass the stress test because of it
• are forced to rent longer as a result.

For folks in this bucket, there's a good chance they'll retire poorer.

That is, they'll lose the opportunity to accumulate tax-free equity appreciation. With soaring rents near all-time highs, it's hard to make that up with rental savings—particularly if future appreciation rates stay anywhere near the historical 5%+ annualized level.

This first-time buyer plight was the impetus for Marathon Mortgage's latest product, a deep discount 6-month mortgage. It launches on Monday, other than in Quebec and the Territories.

Floating-rate borrowers hoped (prayed) the Bank of Canada’s rate pause would last. It lasted all of 133 days.

The Bank was forced to hike before seeing today's vital jobs report, before a cut was priced in and with no press conference Wednesday to explain itself. That's what worried central bankers do after realizing they paused prematurely.

In a competitive mortgage market, brokers sometimes have to take the road less travelled. That includes trying lenders they wouldn’t usually think of.

One lender that most brokers don’t think of is Shinhan Bank Canada, a subsidiary of Korea’s second-largest bank by assets. But it may pay to keep it in mind, and here's why.

The Bank of Canada has sucker-punched rate floaters and the real estate market with a 25 bps rate boost.

In one swift statement, it has decidedly reset rate expectations. Market odds now have a July 12 hike at a 61% probability, with potentially another increase by December. Another move would take the benchmark prime rate from 6.95% at the end of today to a nosebleed 7.20% (last seen in February 2001).

According to a Reuters poll last week:

• 24 of 28 economists expect no change at Wednesday's BoC meeting.
• Two-thirds expect no further overnight rate changes at all this year.

That's in clear defiance of market pricing (see table below). And the market is slightly more accurate than economists over the long run.

The Bank of Canada's job isn't done—judging from the hike and a half now priced into the #OIS# market this year.

Markets see what the BoC sees: stubborn perkiness in labour, services and housing markets, with core inflation plateauing.

The Bank of Canada knows rates are restrictive but worries they're not restrictive enough. Real rates are still low compared to pre-#GFC# rate cycles. And if the late 1970s (chart above) taught central banks anything, it's that they can afford only so much patience with lagging monetary effects—before running the risk of inflation expectations re-igniting. A dangerous scenario like that could drag out this hiking cycle far longer than necessary.

Where are these lagged effects?

Multiple online brokers have launched in-house lenders in recent years. But this one's different.

This one is Rocket Mortgage Canada, sister company to Rocket Mortgage, the largest retail lender in the United States, with $133 billion (USD) in originations last year.

Rocket Canada's shiny new lender launches on Monday, and it's got the brand and backing to make an impact in Canada's mortgage space. To learn how much of an impact, MLN spoke with Hash Aboulhosn, Co-Founder & President of Windsor, Ontario-based Rocket Mortgage Canada.

Should consumers be excited—and competitors worried? Here's what he told us...

• BoC meeting odds: The #OIS# market now implies a 33% chance of a BoC rate hike on June 7. Another 25 bps increase is almost fully priced for September 6. The market sees the first cut now in spring 2024, but that's eons away in bond time. If incoming data—especially unemployment—start coming in weaker, which is a high probability, cut timing would be pulled forward once again.

CIBC officially stopped selling mortgages through brokers in 2012. But, while few know about it, the bank has been back in the broker channel for some time now.

Washington's political establishment is nearing a resolution on the debt ceiling fiasco. With a bit of last-minute horse-trading, Congress should be able to lift the debt limit by the Treasury Department's revised June 5 deadline.

That should hopefully remove some upward pressure on U.S. yields, which have combined with CPI concerns to take Canadian fixed rates higher.

"The bulk of the recent back-up in Treasury yields has been in real yields, not in the implied inflation premium," BMO said Friday. Translated into English, this suggests that U.S. debt and spending concerns have been significant rate drivers as of late.