May 2013
Our panel's final verdict for this month's fixed and variable mortgage rates.
Summary
Spring may be in full force, but no hot growth is anticipated for fixed and variable mortgage rates. As bond yields remain low, and the Department of Finance continues efforts to stem household debt levels, lenders are not likely to challenge the status quo with a dramatic fixed mortgage rate drop. Variable rates are to remain the same as there was no change announced in the last Overnight Lending Rate announcement, and none anticipated for the foreseeable future.
Fixed Rates: Unchanged
As mortgage rates remain the focus of government efforts to minimize household debt levels, and Finance Minister Jim Flaherty cautions banks against excessively lowering their offerings, it's unlikely that fixed mortgage rates will see a dramatic drop over the coming month. While bond yields have seen a modest increase, investors continue to regard Canada as a safe haven amidst international economic upheaval, and bond yields remain generally low in turn.
Variable Rates: Unchanged
With such a narrow spread between the lowest fixed and variable mortgage rate options, many consumers are choosing to lock in for their mortgage terms, prompting lenders to focus on their fixed offerings. It is also not anticipated that the Bank of Canada will increase the Overnight lending rate in the upcoming June 29 announcement, which is outgoing governor Mark Carney's last.
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Fixed Rates: Unchanged
Bond yields in Canada continue to remain low, therefore I expect the record low fixed rates to remain unchanged in the short term.
Variable Rates: Unchanged
Not many Canadians are choosing variable rates right now, therefore lenders are not paying much attention to their variable pricing. The Bank of Canada will not be moving prime in the short term, therefore I expect variable rates to remain unchanged.
Next Opinion: Elisseos Iriotakis
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Fixed Rates: Unchanged
Bond yields continue to be driven lower but with Finance Minister Jim Flaherty asking banks to not lower mortgage rates any further, we may have hit a bottom on fixed rates. There is room for banks to lower their fixed rates, but Flaherty's comments simply mean that the banks juice up their profit margins, while the consumer pays a higher rate of interest. We will likely sit at these levels for quite some time.
Variable Rates: Unchanged
This is getting boring, but that's a positive thing when it means that rates will not rise anytime soon!
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Fixed Rates: Unchanged
Finance Minister Jim Flaherty appears to be channeling his inner Pierre Trudeau who famously said in a previous era, "the universe is unfolding as it should" – at least as it concerns housing and mortgage cooling in the present context. With elevated levels of indebtedness, and notwithstanding the anemic growth rate of the Canadian economy, it is extremely unlikely the minister will reverse the tightening of the mortgage underwriting rules previously announced.
Variable Rates: Unchanged
Given the very modest growth rate in the Canadian economy and low levels of inflation, it is most unlikely that incoming Bank of Canada Governor Stephen Poloz will make any sudden changes. Contrary to the ungrounded, untethered and unsubstantiated media speculations concerning the alleged reduction in the independence of the central bank with the appointment of Stephen Poloz, the Bank of Canada Governing Council, populated by four Deputy Governors, Senior Deputy Governor and the incoming Governor will continue to act in the conservative and prudent manner for which the Bank of Canada is known. Their actions will be based on empirical data from the Canadian economy, commodity markets, labour markets and exchange markets. Restated, no revolution occurred in Ottawa last week with the new appointment, there will be no radical changes in monetary policy and yes, the universe is unfolding as it should.
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Fixed Rates: Unchanged
It's not anticipated that fixed mortgage rates will trend dramatically lower over the coming month. Consistently unstable international economic conditions drive investors to Government of Canada bonds, ensuring rates remain low. As well, efforts on behalf of the Department of Finance to stem household debt levels may discourage lenders from challenging the mortgage rate status quo.
Variable Rates: Unchanged
No movement will be seen for variable mortgage rates as the Overnight Lending Rate remains at one per cent for the foreseeable future. It is not anticipated that change will be brought forth in the next Rate and Monetary Policy Announcement, outgoing Bank of Canada Governor Mark Carney's last, on June 29.
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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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