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Posted 3 Comments on US Fed rate hike doesn’t mean Bank of Cda rate hike! Mortgage Rates

US Fed rate hike doesn’t mean Bank of Cda rate hike!

Janet YellenLast month, the US Fed Reserve Bank Chairperson, Janet Yellen, raised rates for the first time since 2006.    Historically, Canada follows the US with rate movement..  However, times are changing…Don’t expect Canada to follow the US move anytime soon.

stephen polozDivergence.  That’s the new buzz-word.  Bank of Cda Govr, Stephen Poloz said, “Usually you think of the Canadian economy following the U.S. economy fairly closely. This will be one of those places where it really doesn’t.”   “But as a macro statement, there will a divergence there. We’re already seeing it, and so you should expect a divergence in policy too,” he said. Continue reading “US Fed rate hike doesn’t mean Bank of Cda rate hike!”

Posted 4 Comments on Mortgage rates went up…. but why? And will they continue to go up? Interest rates

Mortgage rates went up…. but why? And will they continue to go up?

fearup down graph

A month ago, I said Fixed mortgage rates probably hit the bottom.   A week later, fixed mortgage rates started to go up… around 0.20% over the past 3 weeks.  Variable rate mortgage pricing has gone from Prime less 0.65% to Prime less Prime less 0.40%.

Now, here’s the thing….  I don’t think rates will skyrocket over the next 6 or 12 months, like the pessimists would have you believe.  I think mortgage rates hit the bottom….BUT, they probably won’t go up very quickly.

In fact, the forecast now is for the Bank of Canada rate to stay the same until 2017.   This is just another example of how the world has become a smaller place.  If someone sneezes in Germany, we catch a cold.  With most of the global economies just getting by, there isn’t much reason for mortgage rates to go crazy.   They should remain low.

The key driver for rates going up recently is nothing more than profit taking.  Banks have had a great year… In case you didn’t know.  That’s right.. we seem to forget that 2015 was one of the best years on record for real estate and mortgage volume…  and house prices have never been higher.    Funny how that seems to get lost in the media reports.

Look for Variable rate pricing to fall in the new year…  Fixed rates could also come down slightly, but don’t count on them hitting the record lows that we saw this summer.   Hey, that’s not to say rates are bad.   We are still well under 3.00%.   These are ridiculously low mortgage rates.    Enjoy them while you can.

Your best interest is my only interest.   I reply to all questions and I welcome your comments.  Like this article?  Share with a friend.

Steve Garganis 416 224 0114 steve@mortgagenow.ca

Posted 2 Comments on Trudeau sworn in as new PM, and bond yields jump leading to higher fixed mortgage rates! Interest rates

Trudeau sworn in as new PM, and bond yields jump leading to higher fixed mortgage rates!

Trudeal Liberal majorityYesterday, our new Prime Minister gets sworn in.  Justin Trudeau is Canada’s 23rd Prime Minister.   Some interesting facts…  Bond yields have gone up significantly in the last 2 weeks, since the election.  Fixed rates are priced directly from the Govt of Cda Bond yields.  If the yields go up, then fixed mortgage rates go up.  If they go down, then fixed mortgage rates go down.

Since the election on Oct 19, the bond yields have made a steady climb upwards.  Going from around 0.80% to 0.97% today..     Investors seem to think the Trudeau govt will keep it’s promise and spend our way to prosperity.   The concern is that if the govt of Canada increases its borrowing, the borrowing costs will go up.  Meaning it will cost the govt more, which in turn affects personal borrowing costs.   That’s you and I.

Watch for fixed mortgage rates to climb over the next month or so.  Right now, the increase is expected to be minimal…. but that could change.

I’ll be watching and reporting how this plays out.   Let’s hope the campaign promise of increasing the deficit was one of those promises that doesn’t get honored.   If you want to keep borrowing costs low, then you also want less govt, not more.

Your best interest is my only interest.   I reply to all questions and I welcome your comments.  Like this article?  Share with a friend.

Steve Garganis 416 224 0114 steve@mortgagenow.ca

Posted Mortgage News

Trudeau effect on housing market, interest rates and more….!

Trudeal Liberal majority“My fellow Canadians,  Canada has spoken…”  you’ve heard the speech before.  Okay, now that the party is over, what’s the hangover gonna look like?    It’s hard to say for sure.   Politicians are infamous for making promises they can’t keep.

One thing that we (I’m talking about anyone with a mortgage or invested in real estate) should be concerned with is what the Liberals plan to do with housing, mortgage rules, interest rates.

Here’s part of what they have promised..    Good and Bad. Continue reading “Trudeau effect on housing market, interest rates and more….!”

Posted Interest rates

Rates usually drop leading up to a Federal election!

Election 2015History tells us that mortgage rates usually drop leading up to an election. And 2015 has followed that trend.   It started in January of this year, when the Bank of Canada (BOC) Governor, Stephen Poloz, shocked Economists with his surprise 0.25% Bank Rate cut.

(CanadaMortgageNews.ca readers will remember, not all were shocked, as I had predicted a rate drop just days earlier).

Then in July, the BOC Govr did it again..  this time, it wasn’t as much a shock.  The Bank Prime was cut by another 0.25% after months of negative Economist data showed the Canadian economy was slowing.  Continue reading “Rates usually drop leading up to a Federal election!”