Skip to content

CategoryRate forecast

Posted Mortgage Rates

No surprise, Bank of Canada keeps rate the same

No real surprise here… Just about everyone expected the BOC to keep the Key Rate unchanged at today’s fifth of eight scheduled meetings.   This keeps the your Bank Prime lending rate at 3.00%…. Here’s

We can thank a slower than expected U.S. recovery and the European debt crisis…   With all this uncertainty in the global economy, it appears interest rates won’t go up until there is some positive news…

Most experts fee that no change will occur til later this year and some are even forecasting no rate hikes til next year.

The BOC did hint they do want to raise rates but are being cautious in their approach.  Here’s a report from CBC.ca.

Enjoy the low rates..

Posted Mortgage Rates

TD Economics forecasts no Variable rate hike til 2012

This week, TD Economics said the Bank of Canada probably won’t raise rates til 2012.   How quickly things can change.  Just a few months ago, most Economists and Financial Experts were calling for the Bank of Canada to raise rates this summer.. some said as early as May… Well, that didn’t happen.

There are many reasons but TD’s Chief Economist, Craig Alexander, said it was low inflationary expectations, the negative impact on the European financial instability (Greece, Ireland, Spain, Portugal) and the high $Canadian dollar.  We can also through in Japan’s Tsunami and the Middle East political uprising.

Fixed rates have also not gone up as the Economists were forecasting earlier this year.  Instead, they have come back down to historical lows, once again… The Bond market affects fixed rates and we’ve seen the 5 year Canadian Bond drop 80 basis points since mid April.

All this is great news for borrowers as there appears to be little pressure to raise interest rates anytime soon.

Posted 3 Comments on Economic and Real Estate Outlook from Annual Mortgage Broker’s conference. Interest rates

Economic and Real Estate Outlook from Annual Mortgage Broker’s conference.

On April 14, I attended the annual Independent Mortgage Brokers Association (IMBA) annual conference.   We were fortunate to have Canada Mortgage and Housing Corporation’s (CMHC) Regional Economist, Ted Tsiakopoulos, share his outlook on the economy, real estate and interest rates.

Click here for the entire presentation.    This is a summary of CMHC’s outlook:

  • No evidence of housing bubble.
  • housing market is stabilizing in Ontario.
  • we won’t see the growth in prices as in years past.
  • this outlook is still uncertain given all the global events, both political and economic.
  • credit growth is slowing.
  • Interest rates will rise as economy improves.

The good news is that there doesn’t seem to be a housing bubble.  Interest rates will gradually return to normal.  And we don’t seem to be taking on as much personal debt as the government and media has led up to believe in the recent months.

Posted 4 Comments on NDP polls up and Variable rate mortgages more costly… coincidence? Mortgage News

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.”


Posted Interest rates

Inflation rate drops in February and rate hikes pulled back.

It may seem hard to believe  but Canada’s core inflation rate is down in February to lowest level since 1984 as reported by CBC.  It’s now 0.90%.

Filling up my car at the gas pumps or buying groceries is certainly costing me more… So how can the inflation rate be lower be lower?

The Core inflation rate strips away food and energy costs resulting in a lower rate of inflation.

The Bank of Canada has a Target inflation rate of 2%.  The Target range is 1% to 3%.  When you combine a high Canadian $dollar that is at par with the $US dollar and this low inflation rate, the Bank of Canada less likely to raise the Target Rate….for now.

Here are a few forecasts…  Citigroup says a rate hike will not take place in April but instead, July.  And retired RBC Chief Economist, Patricia Croft says to watch the Bank of Canada 2 year bond yields for an indication of where the market thinks rates are headed.   The yields have dropped from 1.90% to 1.68%.    She says the market thinks rates won’t go up til October and only by 35bps.  But she thinks we should be ready for summer rate hikes.  The next few inflation reports will play a big part in the Bank of Canada’s future decisions.

I tend to agree with both forecasts… Summer rate hikes are  likely…. but I’m not sure how high and how quickly these rate hikes will happen.   We’ll be watching and reporting.