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Posted 2 Comments on Bank of Canada says no rate hikes, but possible rate drops!! Mortgage News

Bank of Canada says no rate hikes, but possible rate drops!!

stephen poloz  Last week, the Bank of Canada governor, Stephen Poloz, held the first of 8 scheduled meetings to set the Target Rate.    This is the rate used to set the Bank Prime rate which currently sits at 3.00%.   No surprise, no change in the rate.  It has been the same since Sept 2010.

From 2011 to 2013, the previous Bank of Canada governor, Mark Carney, continually announced of a pending rate increase.   But late last year, Poloz changed the tide when he announced it could be a few years before rates go up.   One of the key drivers for rate hikes is inflation.  The BoC target for inflation is between 1% and 3%.  If inflation goes above 3%, we can expect rate hikes.

Inflation is not a concern.  In fact, there are concerns about deflation as the current inflation rate sit at 1.2%.  Some experts believe we could see the BoC rate drop.  Great news for anyone in a Variable rate.   We are also seeing the govt of Cda bond yields drop.   Friday’s close was down to 1.59% for 5 yr bonds.  Haven’t seen that level since June 2013.   This means Fixed mortgage rates will probably go down further. Continue reading “Bank of Canada says no rate hikes, but possible rate drops!!”

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Buy now or wait for house prices to fall? The results may surprise you…

Housing-affordability

Should I buy now with interest rates still hovering at record lows, or wait for prices to fall?   When will house prices fall? … and by how much?    What will the interest rate be in the future when house prices fall?

These are the questions most Canadians asking themselves these days.   It’s no secret that Real Estate values are at an all time high in most parts of the country.   The calls for a housing correction, crash, or bubble have been going on for almost 10 years now but it hasn’t materialized.

I won’t get into the discussion here about whether house values will drop or crash or when that could happen.. because I don’t think it should be part of the buying decision.   That’s not a typo.  Market timing is a dangerous thing.  Stock advisors will tell you this.  Buy now, if you are able to commit to the plan.  Read on to see why I believe this to be true. Continue reading “Buy now or wait for house prices to fall? The results may surprise you…”

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Unexpected job loss report and effect on mortgage rates.

unemployment Last week’s Employment Stats shocked everyone when we didn’t see the expected 14,000 new jobs created as Economists were expecting.  Instead, we got hit with a reported 46,000 jobs lost in December.    Economists aren’t always accurate with their forecasts (news flash) but they usually aren’t this far off either. We won’t look at why they miscalculated here, but I do want to look at the effects of this bad news on your mortgage.

EFFECT ON FIXED MORTGAGE RATES

Higher unemployment and job loss is never a good thing.  We’re not celebrating here.   But we need to understand how it affects our mortgage rates.     When it comes to rates, bad economic news is good news.    And we saw the effects almost immediately.  Bond yields dropped by around 0.15% to 1.73%, taking the pressure off Lenders to raise rates (fixed mortgage rates are priced closely to Govt of Cda bond yields).   This means fixed mortgages won’t go up anytime soon and could even fall should the bond yields remain at this level. Continue reading “Unexpected job loss report and effect on mortgage rates.”

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CMHC’s Ontario Housing conference 2014 highlights: the news is good!

CMHCA few weeks ago, I attended CMHC’s Ontario Housing Market Outlook conference.  This annual conference provides Financial experts with an insight into some of the best data available.    Now, in case you didn’t know it, CMHC probably has the largest database of information in Canada.  So when they publish stats and make forecasts, we need to listen.

This year’s speakers included Ted Tsiakopoulos, Regional Economist CMHC, Ed Heese, Senior Market Analyst CMHC, Dave McLean, President Mattamy Homes (Canada’s largest home builder) and Peter Zimmerman, Director of Development Freed Developments (highrise condo builders).   I really enjoyed hearing Ted speak.  His presentation was backed up by a wealth of stats.   Let’s see if you agree about the forecast. Continue reading “CMHC’s Ontario Housing conference 2014 highlights: the news is good!”

Posted 2 Comments on Another US Govt shutdown… could mean lower mortgage rates for Canada. Interest rates

Another US Govt shutdown… could mean lower mortgage rates for Canada.

debt ceilingRemember the U.S. Debt ceiling crisis in the summer of 2011?   Panic was an understatement.   That story dominated headlines for close to 2 months.   Stock markets dropped, but mortgage rates dropped, too.  In fact, fixed wholesale mortgage rates dropped 0.50% in the months leading up to the Debt Ceiling deadline, from June to August….  And continued to drop another 0.70% into 2012.

Mortgage rates hit all-time lows in the fall of 2011 and just kept right on dropping.  We hit our the all-time low in May 2013 before rates jumped almost 1.00% to our present 3.69%.  (This is for 5 year fixed mortgages.  Variable rates did not budge… Bank Prime rate has changed since Sept 2010…that’s important to remember as I will explain later) Continue reading “Another US Govt shutdown… could mean lower mortgage rates for Canada.”