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.

October 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.

FIXED RATES
Unchanged
VARIABLE RATES
Unchanged

Summary

There may be big economic developments south of the border, but they'll fail to shake up Canadian mortgage rates this month. Fixed rates are to remain consistent as bond yields stick to their trajectory, while the variable cost of borrowing is unphased by the end of the U.S. Fed's bond buying program; policy makers in both countries insist there is no imminent change for central rates.

Fixed Rates: Unchanged

Government of Canada bond yields have remained consistently low since the summer months, with no significant reaction to recent events affecting economic stimulus measures in the U.S. There's no expectation that fixed mortgage rates will move in either direction for the coming month.

Variable Rates: Unchanged

Even though October spells an end of the U.S. Fed's quantitative easing taper, policy makers there have been adamant that a rate increase will not follow immediately suit. This sentiment has been echoed by Bank of Canada Governor Stephen Poloz, who has stated that economic conditions here don't yet warrant any change to central rates. All signs point to a sustained cost of variable borrowing in the months to come.

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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
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VARIABLE RATES
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Fixed Rates: Unchanged

At mid-September, a wave of economic optimism caused bond yields to jump by about a quarter of a point. That wave is now subsiding and bond yields have retraced about a half of that rise. Mortgage rates did not follow the rise, which means that the gap between mortgage rates and bond yields has been reduced to an unusually small level. In consequence, there might be a small upward adjustment of mortgage rates during the coming month. It is also possible that bond yields could fall back a bit more, in which case mortgage rates won't need to adjust. That said, while economic conditions continue to improve, there is still a long way to go until there will be a need for any substantial and sustained rise in rates.

Variable Rates: Unchanged

The Bank of Canada and the U.S. Federal Reserve clearly expect 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
Up
VARIABLE RATES
Unchanged

Fixed Rates: Up

We have seen long-term bond yields move up in the last few days as the U.S. Federal Reserve hints of higher rates and the U.S. bond buying comes to a halt. If bond yields remain at their current levels we will see long term mortgage rates move up by at least 0.25 per cent in the next few days and weeks.

Variable Rates: Unchanged

The recovery in the U.S. remains tepid and the Prime rate won't move for some time. 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
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VARIABLE RATES
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Fixed Rates: Unchanged

The 5-year Government of Canada yield has been bouncing around between 1.4 and 1.6 per cent since July of this year. There is no evidence of a breakout in either direction in the near future.

Variable Rates: Unchanged

A careful read of the speeches delivered in September by Deputy Governors of the Bank of Canada reveal a clear pessimism concerning the Canadian economy. For example, the newly appointed Senior Deputy Governor Carolyn Wilkens was most revealing in the title of her Sept 22, 2014 speech, "Monetary Policy and the Underwhelming Recovery". The speech two days later by Deputy Governor Lane asked, "Are we there yet?" concluding the recovery is under way – which clearly suggested we are "not there yet" (as we are merely on the road to "there").
These two empirical yet reflective speeches by two very senior deputy governors of the Bank of Canada within the last two weeks reveal pessimism tinged with some slight optimism concernin

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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
Down
VARIABLE RATES
Unchanged

Fixed Rates: Down

Bond yields have seen a six per cent drop over the past few weeks, but five-year fixed rates have remained relatively stable. I think we could see a slight decrease in five-year fixed rates this month as we enter the seasonal fall market.

Variable Rates: Unchanged

Despite the U.S. Federal Reserve's wind-down of quantitative easing this month, policymakers have been adamant that there will be no change to central rates in the short term, both south of the border and in Canada. While there has been renewed talk of the risks posed by our overheated market, Federal Finance Minister Joe Oliver has stated he doesn't believe a true housing bubble exists. All signs point to sustained central rates for the time being.

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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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