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.

September 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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VARIABLE RATES
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Summary

Back-to-school season ushers in a fresh start, but there's to be no new development for Canada's mortgage market this fall. Stable bond yield levels continue to set the stage for fixed mortgage rate discounts, while economic growth factors fail to rock the Bank of Canada's boat; the governing lender has announced no change once again for central rates.

Fixed Rates: Unchanged

Despite a strengthening Canadian dollar, government of Canada bond yields, which correlate directly with fixed mortgage rate pricing, have remained competitively low. Lenders have followed suit, and these discount-friendly conditions are to linger throughout early fall.

Variable Rates: Unchanged

The Bank of Canada has called for no change to central interest rates in the early September announcement, and has taken a neutral stance with policy nuances; improvements to exports and inflation will fail to make a mark until growth is proven to be sustainable, leading to no change for variable-rate mortgages.

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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

Post-recession conditions pave the way for little change to bond yields, and in turn mortgage interest rates. I anticipate no substantive changes in the near term, though fixed rates may edge a half point higher by the end of next year.

Variable Rates: Unchanged

The so-called "Great Recession" began six years ago. In theory it lasted less than a year. But, in reality, it left behind lasting damage. In both Canada and the U.S., more than 63 per cent of adults had jobs before the recession. Now the rates are much lower at 61.4 per cent in Canada and 59.0 per cent in the U.S. These changes may not seem very large but they mean that there are huge numbers of people without jobs. In short, while the rate has started a gradual rise in the U.S., there is a very long way to go before there is any case for substantial rises in mortgage interest rates. No substantive changes are expected this year or next year.

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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 very stable the last several weeks despite the recent fluctuations in the Canadian dollar. As a result, we don't expect to see mortgage rates change in either direction. However, despite the current low-rate environment, the regulation changes this year have hurt the ability of some first time home buyers to purchase a home.
The structural changes in the last few years in this industry has led to a transition of power from the consumer in the pre-2008 years to the banks in the post-2008 years to the banking regulators in the current time period. Consumers must play by the ever changing rules set out by the regulators.

Variable Rates: Unchanged

We will have to see a sustained recovery in the U.S. economic situation before we start seeing the Banks change their variable rates. As a result, we don't foresee any changes to the variable rates in the next while.

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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 bond rate has been bouncing around between 1.4 and 1.50 per cent. There is no evidence of a breakout in either direction. It certainly appears there is a reasonable balance between the demand for mortgage money in this category and the supply.

Variable Rates: Unchanged

We know that during the last year, Governor Poloz has been softly walking back from Carney's strategy of proving forward guidance to markets, representing a gentle break with the past.

However, in a truly remarkable interview with the Globe and Mail on August 24, while at the annual Federal Reserve conference, Poloz stated the Bank of Canada would not automatically increase rates at the same time as the Federal Reserve. Those who have examined a long-term graph of the Federal Reserve and the Bank of Canada rates know there is an astonishing synchronicity between the two central bank rates over long periods of time stretching back decades. If the Fed were to increase rates and the Bank of Canada did not follow, this would place downward pressure on the loonie.

Now in his latest musings and public comments, the Governor stated there is enough slack in the Canadian economy and no need to increase interest rates any time soon.
When we take these decisions and comments together, it is clear Governor Poloz has provided his own unique guidance that strongly suggests no interest rate increase before 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

Consistently low bond yields have given lenders the room to competitively price their fixed mortgage rates; the best five-year fixed mortgage rates remain below the 3 per cent threshold. Shorter-term mortgages are also aggressively priced, with two-year fixed options below the 2.5 per cent mark. I don't anticipate conditions will change enough to warrant any fixed-rate price fluctuations in the short term.

Variable Rates: Unchanged

The Bank of Canada has again taken a hands-off approach to central interest rates, announcing no change in the early September announcement. This marks the full fourth year of no interest rate change, as Canada continues to recover from recession conditions. While exports have experienced surprising improvement this summer, the BoC states sustained growth is needed before it becomes a defining factor for rates. As well, high household debt levels continue to pose risk to Canada's economic stability. All signs point to the Bank sticking to their 2015 timeline in regards to the variable cost of borrowing.

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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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