Mortgage rate outlook panel

Comments

Fixed rates

Variable rates

Dan Eisner , President, Verico True North Mortgage

Fixed rates: up

Explanation: even slightly positive news is pushing bond yields higher off of historically very low numbers. Mortgage rates my not get a lot higher but they are certainly not going lower.

Variable rates: unchanged

Variable rates will remain very attractive.

George Hugh, Vice-President, Treasury, ING DIRECT

Fixed rates: down

The slowdown in residential mortgage activity in Canada was correctly predicted, but for the most part it has slowed beyond expectations. We are already seeing lower mortgage rates than the ones that were here prior to the most recent rate increases. This trend will continue as it is being fuelled by a slowing market and excess demand for mortgage assets by the banks. No matter how you look at it, consumers will be the big winners!

Variable rates: unchanged

Profitability on variable rate mortgages is beginning to disappear. With fixed rate mortgage pricing on the decline, the appeal of VRM mortgages is not as prevalent. Expect VRM pricing to stay where it is especially in the near term.

Elisseos Iriotakis, President, SAFEBRIDGE Financial

Fixed rates: unchanged

There have been a number of weak economic reports released over the last few weeks which would indicate we are not going to see any kind of rate increase anytime soon. In fact the bond market has been showing us that confidence in the economy has been dwindling for the last two months, thus a drop in longer term bonds by approximately 60 basis points. This drop has translated into more or less an equivalent decrease in longer term fixed rates over this same period of time and for this reason I feel we will see a cooling off period and a fairly level rate environment over the next 30 - 45 days.

Variable rates: unchanged

Two weeks ago I would have said an increase of .25% for sure but with the recent weakening in the economy, Governor Carney may be best to sit pat. More so to avoid any negative press and to avoid derailing what little momentum the consumer may have. However, I wouldn't be surprised if he did raise the prime lending rate by .25%, but if so, this would be his last for a prolonged period of time; something like 9 - 12 months in order to keep consistent with the time frame that the U.S. is expected to start hiking rates.

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

On holiday this month.

Dr. Ian Lee , Director of MBA Program, Carleton University

Fixed rates: down

The latest numbers from both Canada and the US are trending downward revealing increasing weakness. There is an increasing risk of a double dip recession in the US as both fiscal policy and monetary policy seem to have run out of bullets. While Goldman estimates a double dip at 25%, Paul Krugman estates 40% and the trenchant David Rosenberg estimates over 50%. Residential sales and prices are now declining. Thus, there is a significantly greater supply chasing a decreasing number of mortgage borrowers, suggesting price cutting or decreases in the offered fixed mortgage rate.

Variable rates: unchanged

While the consensus over the summer was another rate increase by the Bank of Canada in September, with the latest awful growth and job numbers in the US, the anaemic economic numbers in Canada and core inflation down to 1.6% (in Canada), it seems increasingly likely that the Bank of Canada will not raise rates this September. Moreover, it is very clear that in the US, consumers are deleveraging in a major way with $6 trillion to go, per Rosenberg. Due to the integration and similarity of the two economies and that Canadian consumers are also over leveraged, it seems that it is only a question of time before Canadian consumers follow the American consumer and start to deleverage and cut spending on everything – including realty expenditures.

Larry MacDonald, Economist, business journalist and author, Canadian Business

Fixed rates: unchanged

Deflation worries and risk aversion are holding yields down in bond market.

Variable rates: up

Bank of Canada expected to raise overnight rate in September.

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

On holiday this month.

Panel consensus