NDP polls up and Variable rate mortgages more costly… coincidence?
This week, we saw two major mortgage lenders raise their Variable rate pricing from Prime less 0.75% to Prime less 0.65% and Prime less 0.50%…
This is really quite unexpected…. We cannot ignore what is happening… The explanation given for the prices changes is ‘profitability concerns’. But the cost of Variable Rate funds hasn’t really changed. We believe there are a few other possible explanations. 
First, we are seeing more borrowers flock to Variable rate mortgages again…. With a 2.20% difference between a 5 year fixed rate and a Variable rate, it’s been much easier to choose to Variable. Banks make more money on 5 year fixed rate mortgages and would rather push you into these products…. And yet another reason is the possible gains in the recent polls by the NDP.
According to this article in the Globe and Mail, we should brace ourselves for more costly mortgages if the NDP keeps moving in the polls. Here’s a quote from the article that says it well, “This interest rate premium on social democratic governments is unfair and tragic. But dismissing it is unrealistic.”
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Steve Garganis View All
As an industry insider, Steve will share info that the BANKS don't want you to know. Steve has appeared on TV's Global Morning News, CBC's "Our Toronto" and The Real Life TV show. He's also been quoted in several newspapers such as the Globe and Mail, The Toronto Star, The Vancouver Sun, The Star Phoenix, etc.
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I’m not surprised that the Globe and Mail would publish an article that would demonize the NDP. After all they have openly admitted that they would like to see Stephen Harper and the Conservatives win a majority government.
The previous story also paints an apocalyptic picture in the event that the NDP either form a minority government or form the opposition. Unfortunately the National Post is a right wing mouth piece for large corporations who also want to see the Conservatives remain in power.
It is unfortunate that there no longer appears to be any media outlet that is unbiased and not pushing a political party’s agenda.
And what is more distressing is that most people haven’t realized that the big media outlets are nothing more than fear generating mechanisms for the parties they support. Since most people believe that the news, as reported, is unbiased and factual, they actually believe what they are told and act accordingly, i.e. panic.
Personally when I read a story that promotes fear and hatred it ticks me off.
Hi Mike, I do agree the media has a lot of power and that they do influence the general public… Having said that, history is showing us that a sudden and unexpected change in government will affect the stock market, bond market and mortgage rates….
SG
I agree that a change in government may have an affect on the markets; however, I don’t believe that this election will result in a sudden and unexpected change in government, as the Conservatives have been challenging the opposition to force an election. In fact the only real change may be that the NDP will form the official opposition instead of the Liberals. Overall this will have no real affect since the Conservatives, during their successive minority governments, have had to secure the support of at least one other party to pass any bill or budget that they have tabled.
Until recently the Conservatives have been boasting about how great our economy is doing compared to the rest of the world. Then as soon as an election is called the economy has become fragile and can only be saved by a Conservative majority. This is nothing more than fear mongering.
Any proposed change in the economic status quo always elicits a knee jerk reaction from “big business” with threats of raising inflation, massive job losses and closing down and moving to another country. Once we realize that this is nothing more than political rhetoric, we may actually be able to move forward and build a better Canada that includes everyone and not just the special interests of “big business”.
Thanks for your input Mike… well said… Another interesting development.. a 3rd major lender has increased their Variable rate pricing to Prime less 0.65% from Prime less 0.75%… When asked why the change, they give the same reply as the other Lenders… ‘profitability concerns’…
SG