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Posted Mortgage News

US govt debt crisis and a slower Canadian economy

It seems US has reached a compromise on the debt ceiling and another crisis avoided.    President Obama and the Republicans have come to an agreement.   read more here.

We already knew the US was on shaky economic ground… no one really knew how a US debt default would affect Canada or the rest of the world.   It certainly wouldn’t be a good thing.

But before we can breathe a sigh of relief, Canada’s Gross Domestic Product (GDP) fell by 0.3% in May.  The largest single month drop since May 2009.  This unexpected drop is good news for those of us with mortgages.

Interest rates are expected to remain low for this year.   And a Bank of Canada rate hike is less likely in September or even October.

Enjoy the low rates.

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 1 Comment on Bank of Canada leaves Key Rate unchanged Interest rates

Bank of Canada leaves Key Rate unchanged

This morning marked the fourth of eight scheduled meetings for 2011 by the Bank of Canada.  No surprises, the BOC left the rate unchanged. This keeps the Bank Prime rate at 3.00% and keeps those Variable rate mortgages well under 3.00%.  Great news for borrowers.

In their press release, the BOC noted concerns about the high Canadian $dollar… increasing the BOC rate would probably mean an even higher $CAD, putting more pressure on Canada’s exports.   The  $CAD is currently $1.02US.  Still, the BOC is concerned about inflation and keeping inflation within the Target Zone of between 1.00% and 3.00% has always been one of the biggest factors that drive BOC policies.   “…inflation expectations remain well-anchored.”

The next BOC meeting is July 19… right now, it does not appear as though we will see any hikes until September or later…

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.

Posted Case study

Report shows Canadian borrowers are too complacent…don’t drink the koolaid.

That’s what a report in the latest Bank of Canada Review had to say…    This article in the National Post sums it up well…  “Simply put, borrowers are often complacent and end up paying more than they should.”

This is exactly the reason I started this site…..To make you an informed borrower. Like the review said,  “consumers have different preferences and skills when shopping and bargaining for a mortgage and where lenders maximize profits based on observing these preferences and skills.”

So, how does the average Canadian borrower know if they are getting the absolute best rate or the right mortgage product?  Is there a better product with a different Bank, Financial institutions or other Lender?  How do you know if you aren’t speaking with an unbiased professional that doesn’t work for any one bank?  For me, there is only one sure way to know you are getting a highly competitive mortgage product…..You must deal with a Mortgage Broker.

Here’s another quote from the Bank of Canada Review…  “Canadian lenders appear to be extremely slow to pass on changes in the Bank Rate to their customers.”  I’m sure this comes as no surprise to most of us.

Never forget that the Banks are a business… and they are here to make a profit… It’s imperative to seek unbiased, market neutral advice…..  A Bank Mortgage Specialist just can’t be neutral or unbiased….They can only offer one set of products…  I save the best for last….

A Mortgage Broker helps to ‘creates competition’ as the report said.

Hopefully, this site will keep you informed and awake…Don’t settle for the status quo….