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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?

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JANUARY 2020 OVERALL SUMMARY

Our experts expect rates to remain unchanged in January.

Fixed Rates - Unchanged Variable Rates - Unchanged

Despite positive developments on the U.S.-China trade front, the recent uptrend in bond yields likely won't lead to large further significant increases in mortgage rates near-term. According to our panel, fixed rates should remain stable in January with only a slight upward or downward drift, if any.

Our experts agree that a rate cut and subsequent fall in prime rate are coming, but not at the Bank of Canada's January meeting. They feel additional negative data is needed to confirm Canada's recent bouts of employment and GDP weakness. Only then will the Bank of Canada risk inflaming debt imbalances with further rate cuts.

This Month's Panelists

Dr. Ian Lee

Program Director,

Carleton University

Fixed Rates - Unchanged Variable Rates - Unchanged

The 5-year government bond continues slightly north of 1.50% with nothing in the next 30 days to suggest significant movement in Canadian yields.?

This is not to trivialize the pending first stage of a U.S.-China trade deal. But, before even being signed, it is being criticized for its failure to address fundamental disagreements between the two countries.?It seems designed to stop further tariff increases and move towards the status quo ante on tariffs without addressing the issue of subsidies for state-owned enterprises or protection of intellectual property. Moreover, the impact of such an agreement on Canada's economy is far from clear.

While the most recent unemployment numbers were a shock with an estimated loss of 71,000 jobs, the economy still continues to grow, albeit at a slower rate than before.

Nonetheless, in light of Governor Poloz's positive analysis of the prospects for the Canadian economy, and barring a second significant decline next month, it seems likely the Bank of Canada will keep punting before reducing rates in 2021.

Dan Eisner

President,

True North Mortgage

Fixed Rates - Unchanged Variable Rates - Unchanged

In mid-December, we saw fixed mortgage rates increase by 0.20%-points, led by RBC's public rate increase announcement.

Bonds yields have bounced around since then but don't seem to be moving consistently in either direction, so we believe fixed rates will remain stable over the next few weeks.

We believe a downward prime rate move is coming but may not happen at the next Bank of Canada meeting.