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CategoryMortgage Rates

G20 Toronto smashes bank windows…Big Six lower their Fixed Rates

In case you’re wondering how the G20 Summit affected Canada’s mortgage business…. Most Lenders have their head offices in the heart of Toronto… and most all of them issued notices that turnaround times and disruptions may occur…Fortunately, Lenders have back up plans because of past emergencies likes 9-11, SARS and the Blackout.

Oddly enough, the Big Six Banks all lowered their Retail mortgage rates over the past few days…. 10bps is not a big drop, but any rate drop should be welcome news to all Canadians.

  • Posted 5 year fixed rate is 5.89%.  This is also the qualifying rate for mortgages with less than 20% down payment and terms less than 5 years and for Variable rate mortgages…..
  • The best discounted 5 year fixed rates seem to be around 4.39%…
  • No changes for Variable rate pricing… Big Six are advertising Prime less 0.35% as their best but wholesale rates are at around Prime less 0.60% and sometimes better.
  • Big Banks giving big push for Hybrid mortgages….and although I’m not a fan of these products for most of us, there may be a place for them for some of us….just make sure you are fully aware of all the pros and cons of this product.

Just a personal comment about the G20 Summit… as someone who was born and raised in Toronto, I was saddened by the images that flashed across our TV set…police cars on fire…broken windows, masked protesters…This isn’t a true reflection of our city…our city has the reputation of being one of the cleanest, safest and friendliest in the world… I hope that message made it’s way to the rest of the world….

Rates hikes may be stalled

Bad news is good news for borrowers…  problems some European economies and other parts of the world could stall the much talked about and anticipated rates hikes..

Bank of Canada Governor, Mark Carney, said the timing of future interest rate hikes is not ‘pre-ordained’.

This just goes to show that even the best Economists don’t have a magic crystal ball….    Fixed rates are still very low, and Variable rates are even lower… 5 year fixed rates are hovering at around 4.39% and Variable rates are at around 1.90%…

This all adds up to good news for borrowers…  Enjoy the low rates!

Bank of Canada raises rates by 0.25%

As expected, the Bank of Canada raised it’s Target lending rate to 0.50% from 0.25%.   This prompted most Banks to raise their Bank Prime lending rate to 2.50% from 2.25%.    But there is some uncertainty about when the next increase will take place as reported in The Star.…. and oh yes, the increases will happen.. not ‘if’, but ‘when’.

Economists have said repeatedly that the Bank of Canada must raise their rate to slow the economy and keep inflation in check… The Target inflation rate is 2.00%.    Most Economists agree that they only need to raise this by 2.00% to 3.00% to have the desired effect.  (See a full report)

Expecting a June 1st rate hike

It seems like a rate hike is almost certain for tomorrow’s Bank of Canada meeting.. but we need to put this in perspective… The Bank of Canada has not raised rates since July 2007… and Mr. Carney has never raised the Target rate since he took his place as Governor…. (he should be a popular person among Canadian borrowers).

But let’s put it in perspective…even if the Variable rate doubles to 4.50% from it’s current 2.25%, we would still be in historically low interest rate territory when it comes to variable mortgage rates…

A 25bps or 50bps or even a 100bps increase should only slow the housing market and not kill it….. Remember, these are EMERGENCY RATES…. The Emergency is over.. and we should want it be over…  We should be happy that we’ve been able to enjoy these record low rates for so long…..  the sky isn’t falling…  we won’t be seeing rates of 9% or 10% or anything near that level…

Bank hikes are questioned by the media

Just can’t leave this one alone…

The Globe and Mail ran a great article about the recent mortgage rate hikes by the Big Banks…..Seems like more of us are questioning the latest round of fixed rate increases….

The article gave some great stats that I wanted to share… First, we should point out that Fixed rates are affected by the Bond Market for the most part but Banks also raise money through GICs… Variable rates are affected by the Bank of Canada Key Lending Rate…. with that in mind…. here are the stats from the article….

10 YEAR AVERAGE…

  • 5 yr Bond 4.05%
  • Big Bank 5 yr posted fixed rate 6.75%
  • Big Bank 5 yr GIC 3.31%

THIS WEEK’S NUMBERS…

  • 5 yr Bond 3.02%
  • Big Bank 5 yr posted fixed rate 6.25%
  • Big Bank 5 yr GIC 2% to 2.1%

Has to make you wonder…?

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