CategoryMortgage Trends

Posted November 5, 20152 Comments Interest rates

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

Yesterday, 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 October 22, 2015 Interest rates

Have Fixed mortgage rates hit the bottom?

Earlier this year, Fixed rates hit new all-time lows. This must sounds like a broken record, or for those in the modern error, sounds like a glitch or a skip (somehow, ‘broken record’ sounds better).

5 year fixed rates hit 2.59%. This is the lowest we have ever seen. (before you start emailing me that you’ve seen lower rates, yes, I know.. I see them too and have access to them.. but those products are full of restrictions, limitations and inflated prepayment penalty calculations… for our purposes, I’m only discussing quality mortgage products with no gimmicks or strings attached).

Now, looking at the 5 yr govt of Cda bond yields (this is where fixed rates are closely priced from), we have seen this drop down to as low as 0.70%… it’s been holding steady in the 0.80% range since July. Normally, the 5 fixed rate is priced 1.10% to 1.50% above the 5 yr bond yield.. but the spread has been at or over 1.79% for quite a while. So, why haven’t the fixed rates gone down further? Continue reading “Have Fixed mortgage rates hit the bottom?”

Posted October 21, 2015 Mortgage News

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

“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 August 31, 2015 Interest rates

Rates usually drop leading up to a Federal election!

History 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!”

Posted July 29, 20152 Comments Bank News

BIG SIX BANKS aren’t passing along the Bank of Canada rate cut to consumers?

Today, the actual BANK PRIME rate should be 2.50%, not 2.70%. What am I talking about?… follow me on this and let’s see if this makes sense.

It’s been a few weeks since the Bank of Canada cut the rate. I’ve been waiting to see how this would play out… First, let’s get the terminology clear. Bank of Canada overnight rate, or Key rate as it’s referred to, directly affects the Retail Bank Prime rate and Variable rate mortgages. This does not have a direct impact on fixed rate mortgages.

Last January, the Bank of Canada Governor, Stephen Poloz, surprised most economists and financial experts when he cut the rate by 0.25% (well, not all experts, I called for a rate cut just a week earlier).
Continue reading “BIG SIX BANKS aren’t passing along the Bank of Canada rate cut to consumers?”