It’s been an eventful week for the mortgage market as we saw 5 year fixed rates drop to an all time new low, and contended with whispers of a forecasted housing market crash, prompting the question – will prices drop with a thud, or are we simply witnessing the effects of a cooling market?
This week we saw the Bank of Canada stick to their guns, announcing they would hold their rate of 1 per cent in their July announcement. In new mortgage rule news, lenders are responding to the guidelines in different ways, with some banks applying limitations to their conventional mortgage products as well – and credit unions may provide options for those looking to skirt the new HELOC and cash-back mortgage rules.
Canada continues to be affected by a dampened outlook on the global economy as the Bank of Canada announced today that it would hold its rate due to lower-than expected economic growth since its April report.
Next up in our Regional Real Estate roundup is big spender Vancouver! Home to Canada’s highest real estate prices, it costs some serious ducats to live in the land of sea and sky. So, why are housing prices mountain high? And what does this spell out for first time home buyers?
May’s been a busy month for Government of Canada 5 Year Benchmark Bond Yields – they’re currently sitting at the lowest rate in 4 months! Why all the activity? Global markets are the main factor behind these levels. As uncertainty continues to plague global economic markets, both Canadian and international investors are turning to the resilient Canadian marketplace – and Government-backed bonds.
Today the Bank of Canada announced that once again (for the 13th consecutive time over the past 19 months) that there will be no change to the overnight lending rate. This pleases variable rate mortgage holders since there are no alterations to the bank’s Prime lending rate and therefore no increase to their own mortgage rate and monthly mortgage payments.
Variable mortgage holders can rest easy knowing that their mortgage payments are not expected to increase any time soon. Once again the Bank of Canada announced that they will leave the target overnight lending rate constant at 1%. This means that Prime rates will also stay the same and therefore variable mortgage rates. The Bank of Canada stated the following reasons for holding the course:
Bank of Canada Governor Mark Carney continues to use the slowdown in the global economy as a crutch to leaving rates near historic lows. He’s again pointing the finger firmly at the European debt crisis indicating he can’t raise rates until the continent is able to gets its issues under control. For the first time he is using the R-word and hinting we could see a “brief recession” in Europe.
The Bank of Canada met this morning and as many experts predicted, including our Mortgage Rate Outlook Panel members, the key overnight lending rate will stay where it is at 1%. This means that the Prime Rate is also unchanged at 3%, and that variable mortgage rate holders don’t have to worry about payment increases just yet.