Mortgage rate outlook panel

Comments

Fixed rates

Variable rates

Dan Eisner, President, Verico True North Mortgage

Fixed rates:

Unchanged - like the Dow Jones in 1999 compared to 2009.

Variable rates:

How now brown cow is only down. Banks are becoming more and more comfortable with better discounts off of prime.

George Hugh, Vice-President, Treasury, ING DIRECT

Fixed rates:

The low interest rate environment combined with motivated buyers and sellers has the housing market hopping.

The real question remains, will the new mortgage rules introduced by Ottawa have an impact on this hot market? My guess is that on its own, the impact will be minimal, it's the so called other factors such as the new HST and higher interest rates that are the wild cards. If the media driven slowdown that we have been hearing about does come to fruition, it will have to fight off low mortgage rates especially in the near term.

Variable rates:

With the threat of increasing interest rates over the next year 12 to 18 months, many banks are in favour of placing their clients into VRM mortgages with the hope of locking them into a higher fixed rate.

Gregory Klump, Chief Economist, Canadian Real Estate Association (CREA)

Fixed rates:

Inflation has recently moved higher, and the economy is rebounding more quickly than previously thought. On their own, these factors suggest upward pressure on bond yields. However, there are doubts about the sustainability of these trends. The five year bond yield, to which the five mortgage interest rate is tied, has moved very little over the past month as a result. With little recent or prospective change in bond yields, and a highly competitive market for mortgage financing before tighter regulations take effect April, fixed mortgage rates are unlikely to rise over the next month.

Variable rates:

No change in VRMs, which are tied to the Bank of Canada's trend-setting overnight lending rate. Expect the Bank of Canada to acknowledge the fragility of the current economic recovery and repeat its conditional commitment to keep the overnight lending rate on hold until the second half of 2010 when it makes its interest rate announcement on March 2.

Dr. Ian Lee, Director of MBA Program, Sprott School of Business, Carleton University

Fixed rates:

The 5 year bond rate is relatively stable while demand for mortgage financing will likely decline somewhat due to the changes to the mortgage financing rules announced last month by Finance Minister Flaherty, that will make it more difficult for marginal borowers to obtain approval for mortgage financing.

Variable rates:

The Bank of Canada promised that it would not not increase rates in the first half of 2010 and I expect Governor Carney will honour this commitment.

Garth Turner, Noted Canadian Author, Speaker and Financial Commentator, Former MP

Fixed rates:

My forecast is for a stand-pat March, with nothing but an occasional tweak in short-term rates on the higher side. In addition, it's budget time in Ottawa, when we all get an abject lesson in what not to do with our own finances.

Variable rates:

This is the month when things start to thaw, including the freeze that teaser Mark Carney put on out absurdly-low interest rates. Although the B0C will not official raise its trendsetting rate this month, I expect the bank to starting tightening up on their intra-bank lending, setting the scene for inevitably higher rates to come.

Panel consensus