The Bank held their third, of eight, scheduled meetings this week. As widely predicted, the Bank of Canada announced that it is holding the key rate steady.
While noting that “economic growth has been faster than expected”, the bank said it’s too early to determine if the economy is on a “sustainable growth path”, citing weakness in export growth, business investment and employment.
The Bank’s three measures of core inflation, taken together, continue to point to material excess capacity in the economy. While there have been recent gains in employment, little growth in wages and hours worked continue to reflect economic slack in Canada, in contrast to the United States.
The bank also took into account uncertainties that include the potential impact of U.S. trade policies. The next rate-setting day is May 24.
This announcement means there should be no change to the prime rate. Great news if you have a variable-rate mortgage or line of credit, need a new mortgage, are renewing, or want to save thousands by consolidating debt at the lowest-cost funds. Or perhaps you are thinking of using home equity to invest in a rental property or second home, or cost effectively complete renovations.
Given the uncertain economic outlook, we continue to expect interest rates to stay low in Canada well into 2020, although the new mortgage rules have caused mortgage rates to be very complicated. Quick rate quotes are not very reliable! That’s why it’s so beneficial to work with an experienced mortgage broker who has access to a wide range of lenders and knows the right questions to ask to assess your situation and provide the best mortgage for your needs. Save yourself time and stress; don’t just ask what the rate is, have a conversation instead.
Your best interest is my only interest. I reply to all questions and I welcome your comments. Like this article? Share with a friend.
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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!”
Fixed mortgage rates are tied closely to the Govt of Cda bond yields. And bond yields are up… Since mid April, the 5 yr Gov of Cda bond yield has gone from 0.75% to 1.07%. That’s a 0.32% jump. Normally, we would see fixed mortgage rates go up.
So far, no increase. But that’s probably more to do with a competitive Spring housing market. This is when most house sales and mortgage transactions take place. The Banks need to maintain certain market share levels in order to keep shareholders happy. They are willing to sacrifice a little profit margin (and I do mean little… they seem to make up for this with higher service fees as was recently reported, but let’s not get into that now…).
If the bond yields continue to increase, we will see fixed mortgage rates rise. That’s an automatic. The real question is how long will the bond yields continue their climb? It will be interesting to watch the next few months. We can expect to see some rate increases as the Spring market ends and Banks look to increase their profit…. A pattern that repeats itself year after year.. but here’s what you can do to protect yourself… Continue reading “Bond Yields are up… will Fixed Mortgage rates follow?”
This isn’t 2010, 11, 12, 13 or even 2014… It’s 2015, and once again, we are making this announcement. 5 year Fixed Mortgage rates are an new all-time lows! Today, you can get a 5 yr fixed rate for 2.79%, even 2.74%, with some conditions. (and by the way, yes, I am seeing slightly lower rates advertised, and I have access to these, but I won’t recommend these to my clients as they contain inferior terms, limited privileges, product restrictions and inflated prepayment penalty calculations… I won’t promote these.)
Just 2 years ago, the Federal Minister of Finance’s office picked up the phone, and called a Bank because they were advertising a 5 yr fixed rate at 2.99%. The federal govt was concerned that the record low rate, at the time, would promote more consumer spending and make the already hot real estate market, even hotter. Continue reading “Mortgage Rates hit Record lows again!”
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.”