Mortgage Rate Outlook Panel

Our panel of mortgage experts share their views on Canadian mortgage rate trends each month by answering this question: What is your outlook for Canadian mortgage rates over the next 30-45 days?

View this month's answers below.

December 2014

Will Dunning
Chief Economist at CAAMP
Dan Eisner
President, True North Mortgage
Dr. Ian Lee
Program Director, Carleton University
Kelvin Mangaroo
President of RateSupermarket.ca
Panel Consensus

Our panel's final verdict for this month's fixed and variable mortgage rates.

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Summary

Holiday home shoppers have plenty of reason to be merry as festive fixed and variable-rate pricing will remain throughout the winter season. Low bond yields have yet to prompt movement within fixed rates, while the Bank of Canada will stick to stimulus measures amid oil's big decline.

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Low bond yields have persisted since the autumn, offering no economic incentive for lenders to hike their fixed rates. It's anticipated that these discounts will last throughout the holiday season - and will be sure to make homebuyers and renewers quite jolly.

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It looked for a time like Canada's economy would recover sufficiently by 2015, paving the way for a central rate raise. However, oil's recent drop means our nation could face a very different economic reality. This, combined with lingering high household debt levels, will prompt the Bank to stick with current stimulus measures, perhaps even later than the speculated Spring 2015 timeline.

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First Opinion: Will Dunning

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Will Dunning
Will Dunning is the Chief Economist for the Canadian Association of Accredited Mortgage Professionals, and operates his own consulting firm, Will Dunning Inc., which specializes in economic and demographic research.
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Fixed Rates: Unchanged

For more than six years we have heard cautions about an "inevitable" rise in mortgage interest rates. We're still waiting for the "inevitable". That said, economic conditions are gradually strengthening. And, while the main driver of growth in Canada and the U.S. has been housing activity, we are finally starting to see signs of sustained improvement in the manufacturing sector. This broadening of economic recovery may finally be creating conditions that will support some rises in interest rates. But those rises should be expected to be very gradual. Rates for five-year mortgages might rise by a half point during the coming year and a half.

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The outlook has not changed. The Bank of Canada and the U.S. Federal Reserve continue to signal that they will not be raising their administered rates anytime soon, which means that interest costs for variable rate mortgages rates should change very little during the coming year. Analysts continue to expect that any rises for these administered rates might start about mid-2015.

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Next Opinion: Dan Eisner

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Dan Eisner, MBA, AMP
With an innovative vision, Dan has grown True North Mortgage in over 7 locations across Canada.
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Fixed Rates: Unchanged

Bond yields have been flat as of late and as a result, I expect mortgage rates to stay steady for the next few days and weeks. Santa Claus won't be bringing us lower mortgage rates.

Variable Rates: Unchanged

The new, lower oil prices will reduce inflation pressures and have a negative effect on the value of our currency thus greatly reducing the likelihood that the Bank of Canada will mess with the Prime rate.

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Next Opinion: Dr. Ian Lee

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Dr. Ian Lee
Ian Lee is the Director of the MBA program at the Sprott School of Business and the Chair of the MBA Committee.
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Fixed Rates: Unchanged

The five-year Government of Canada yield has been dancing around a very narrow band of roughly 1.2 per cent to 1.4 per cent. This movement does not suggest a change in fixed rates in the near future.

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The latest economic signals continue to be "blooming, buzzing confusion" for they are mixed and contradictory. For example, U.S. growth is galloping with 321,000 jobs created last month – yet Canada lost 10,700 jobs. Inflation is up but oil and the loonie experienced very recent substantial declines. The output gap in the Canadian economy is declining and yet there remains significant slack in the system. The OECD claims the Bank of Canada will raise interest rates in May while the IMF warned against increasing rates too quickly and the BoC is somewhere in between. This all reminds of President Truman's exasperated response when yet another economist said to him, "on the hand this is going to happen but on the other hand maybe not". To which he replied, "can someone please find me a one handed economist?". I remain of the view that the BoC will not increase interest rates before fall 2015.

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Next Opinion: Kelvin Mangaroo

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Kelvin Mangaroo
Kelvin Mangaroo is the President of RateSupermarket.ca, Canada's independent financial rates comparison site.
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Fixed Rates: Unchanged

Bond yields have stayed within a very narrow spread this month, prompting no incentive for lenders to hike fixed rates from their current discounts. Winter home buyers and rate renewers will continue to enjoy low rates throughout the holiday season.

Variable Rates: Unchanged

Recent reports from a multitude of economic sources pointing to a 2015 central rate rise may be trumped by oil's slump; Bank of Canada Governor Stephen Poloz has stated that the price decline will cut 2015's economic growth by one third of a per cent. It's likely the Bank will adhere to its "wait-and-see approach" with no change to variable rates in the foreseeable future.

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About The Panel

RateSupermarket.ca surveys top mortgage experts to gauge their thoughts on the latest mortgage rate trends and if they believe Canadian fixed mortgage rates and variable mortgage rates will go up, down or remain unchanged over the next 30-45 days. The Mortgage Rate Outlook Panel takes into account current market conditions on the day it is released and its members include mortgage bankers, mortgage brokers, economic professionals and other industry experts.

The Mortgage Rate Outlook is not a mortgage rates forecast or prediction but are the sole thoughts and opinions of the panel members. RateSupermarket.ca is not a mortgage broker or lender and does not support or endorse any one of the opinions shared by the panel members. Please seek expert advice before making any financial decisions.

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