The National Post reported on the chief economist’s at Bank of Nova Scotia outlook on mortgage rates and the economy at a recent briefing.

“Bond yields and mortgage rates could head higher before the Bank of Canada’s pledge to hold interest rates steady expires in July. There’s a very good chance long-term rates will head up before then,” Warren Jestin said in Toronto at a briefing sponsored by the Investment Funds Institute of Canada.

He also said that homeowners and variable rate mortgage holders shouldn’t take the Bank of Canada’s bland announcement about keeping rates steady last week at face value, but read the “fine print” as he believes it’s likely 3 & 5 year fixed mortgage rates will be higher before July 2010.

Although this is a longer view than our Mortgage Rate Outlook Panel, you may want to see what short term view our panel of experts have on mortgage rates.

The other major banks followed RBC’s move to lower mortgage rates this week. Bank mortgage rates are dropping as result of lower 1, 2 and 5 year bond yields. Bond yields drive fixed rates because they are a big part of mortgage lenders’ cost of funds that they use for fixed mortgage rates. Variable mortgage rates have stayed the same as the Bank of Canada has not changed their target for the overnight rate (which influences variable rates). The next Bank of Canada announcement is on December 8, 2009.

CIBC

CIBC mortgage rate changes:

TD

TD mortgage rates changes:

Fixed Rates

Variable Rates

VIRM Closed TD Mortgage Prime
VIRM Open TD Mortgage Prime + 0.80%

BMO

BMO mortgage rate changes:

Fixed Rates

Variable rates

5 year closed 2.25%
3 year open 3.05%

Special Offers*

5 year(fixed/closed) 4.29% -0.19%

*This special discounted rate is not the posted rate of BMO Bank of
Montreal. Rate is subject to change without notice. Offer may be
withdrawn or extended without notice. Mortgage funds must be advanced
within 90 days of the application.

Scotiabank

Scotiabank mortgage rate changes:

Their special discounted rates* also changed:

one-year fixed closed 2.35 per cent (decreases by 0.20 per cent)
five-year fixed closed 4.29 per cent (decreases by 0.25 per cent)

* The special discounted rates are not the posted rates of Scotiabank. Rates are subject to change without notice. Offers may be withdrawn or extended without notice and cannot be combined with any other rate discounts, offers, or promotions. Mortgage funds must be advanced within 120 days of the application date. Other conditions may apply.

The other big banks moved to increase their fixed mortgage rates effective today, October 14, 2009, following RBC’s mortgage rates increase last week.

The fixed rate increases range from 0.10% – 0.35% while variable rates remained unchanged. The latest rates are now as follows:

Bank mortgage rate changes

Special rate offers

Scotiabank special offer

* The special discounted rates are not the posted rates of Scotiabank.
Rates are subject to change without notice. Offers may be withdrawn or
extended without notice and cannot be combined with any other rate
discounts, offers, or promotions. Mortgage funds must be advanced within
120 days of the application date. Other conditions may apply.

BMO Special offer

*This special discounted rate is not the posted rate of BMO Bank of
Montreal. Rate is subject to change without notice. Offer may be
withdrawn or extended without notice. Mortgage funds must be advanced
within 90 days of the application.

Scotiabank also dropped their mortgage rates this week after the Bank of Canada’s cut last week, and follows the other big banks move to drop rates as well.

Specials *

Scotiabank offers the following special discounted rates(*) on residential
mortgage:

(*) The special discounted rates are not the posted rates of Scotiabank.
Rates are subject to change without notice. Offers may be withdrawn
or extended without notice and cannot be combined with any other rate
discounts, offers, or promotions. Mortgage funds must be advanced
within 120 days of the application date. Other conditions may apply.

In a very positive response to the Canada Mortgage and Housing Corp’s (CMHC’s) announcement last week to buy up to $25 billion in insured mortgages from the banks, providing lenders with additional cash, giving them more money to lend to consumers and businesses, Scotiabank dropped their Prime Rate to 4.25%, down 0.25%, while TD Canada Trust lowered their’s by 0.15% to 4.35% effective yesterday, October 14th, as reported in the Toronto Star.

This followed the unusual move last week when the Bank of Canada dropped its target overnight rate by 0.50% and the Big Banks only decreased their Prime Rates by 0.25% whereas they would normally follow suit, as we reported here.

TD Canada Trust CEO Tim Hockey said, “We believe that this initiative will be put into effect in a way that will reduce our overall cost of funds and, as a result we are dropping our rate today. As we’ve been saying, a number of factors go into decisions about rate changes. Financial markets are very turbulent, and funding costs are still high. However, we anticipate that our cost of funds will decrease with the implementation of this program, and therefore wanted to take action that
will benefit our customers directly.”

This additional measure by the Federal government to minimize the effects of the global financials crisis means they have injected a huge $45 billion in additional cash into the financial system.

On RateSupermarket.ca, we didn’t see any declines in variable rate mortgages, as the best was still on at 4.50%, but we’ll see if there’s a drop today.

Last month, Scotiabank announced the following changes in their residential mortgage rates, which were effective August 13:

See how competitive these rates are and go compare mortgage rates.