Category Archives: Mortgage Rates

Fixed Mortgage Rate Forecast – September 2013

The mortgage rate roller coaster continues as bond yields dip 20 basis point last week.  This dip comes as a result of the US Fed’s announcement that it will continue to support its bond buying program known as quantative easing.  The announcement surprised and rallied markets reversing upward march of bond yields. Lower bond yields remove upward pressure on mortgage rates and will eventually allow competitive lenders to lower their … Read More

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Variable Mortgage Rate Forecast

Variable mortgage rates are expected to remain at their current levels well into 2014.  Variable mortgage rates are tied directly to the banks’ prime lending rates which are in turn tied directly to the overnight rate set by the Bank of Canada. The Bank of Canada, in September’s scheduled announcement proclaimed that it has decided to maintain the target for the overnight rate at its current level of 1%.  It … Read More

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Mortgage Rates Stabilize

Ben Bernanke and the US Federal Reserve (Fed) shocked markets this week with the announcement that it will continue with it’s bond buy-back program.  This program, known as quantative easing or QE, is designed to keep bonds liquid and to force down yields or borrowing rates for bond issuers.  The net effect of lower bond yields is lower long term mortgage rates in Canada. Earlier this summer Mr. Bernanke hinted … Read More

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Maxed Out and Ready to Refinance

The average non-mortgage debt held by Canadians has climbed by 3.47% to $27,131 over last year.  One reason behind the increase is the new mortgage rule limiting the amount you can refinance.  Canadians who have maintained their spending patterns can no longer use the equity in their house to wipe the slate clean.  Instead they are left with a mountain of high interest debt. While the new rule makes sense … Read More

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BMO Bumps 5 Year Mortgage Rate

Bank of Montreal (BMO) has bumped their “no frills” 5 year fixed mortgage rate by 20 bps to 3.79% effective today.  The move demonstrates the roller-coaster ride clients can expect if they choose the “no frills” option.  Less than a year ago, BMO made headlines by promoting this product at 2.99%.  The move was so bold that it warranted a phone call from the Department of Finance who was concerned … Read More

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Fixed Mortgage Rate Forecast – August 2013

Fixed mortgage rates are primed for a .25% to .50% increase over the next couple of months.  The Department of Finance’s policy change restricting the amount of MBS mortgages that Canada Mortgage and Housing Corp (CMHC) will insure is to blame. Without the ability to insure and then securitize as many mortgage assets, Canada’s mortgage lenders will have to resort to more expensive sources of capital to fund Canadian mortgages.  … Read More

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Fixed Mortgage Rate Forecast – July 2013

5 year fixed mortgage rates are currently overpriced and you can expect to see a 0.25% drop in the next 30 days.  Fixed mortgage rates are priced off of bond yields of the same duration.  Last month the market reacted to comments from the Fed’s Ben Bernanke and bond yields shot upwards by 50 bps.  This reaction was without merit as Mr Bernanke’s comments were nothing new from his previous … Read More

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Variable Mortgage Rate Forecast – July 2013

It’s steady as she goes for variable mortgage rates for the foreseeable future.  Variable mortgage rates are linked to the overnight rate which is controlled by the Bank of Canada (BOC), and the BOC’s new chief, Stephen Poloz is maintaining the same cautious hand as outgoing chief Mark Carney. When asked when we can expect to see rates rise Mr. Poloz replied, “The honest answer is, we really don’t know”.  … Read More

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Spike in Mortgage Rates Temporary

The recent spike in fixed mortgage rates is a direct result of an incredibly sharp rises in bond yields.  I say incredibly because the market grossly over-reacted to Ben Bernake’s comment that the Fed will eventually begin to taper monetary stimulus.  Following this over-reaction, you can expect to see bond yields ease back nearer to their previous lows. Kent Engelke, chief economic strategist at Capitol Securities Management Inc., confirms that … Read More

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Bond Yields Hit 1 Year High

5 year Government of Canada benchmark bond yields were 1.30% just a year ago today and after a year of relatively minor changes are just now spiking at 1.81%.  This 0.51% increase is putting upward pressure on 5 year mortgage rates suggesting the new 5 year mortgage rate should be 3.39% up from 2.89% just a few weeks ago. Although nobody wants to pay an extra .50% on their mortgage … Read More

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