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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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Please note: Due to surprising economic data released after the July 7th publication date of the latest Mortgage Rate Outlook we have now issued a July 2010 update.

Global economic uncertainty may dampen consumer confidence and cause Canadians additional stress during the summer holidays, but it also means that the Bank of Canada will not increase mortgage rates on July 20th resulting in unchanged variable mortgage rates in the short term.

RateSupermarket.ca''s panel of financial experts believes that variable mortgage rates will stay level while fixed mortgage rates could fluctuate slightly during July.

Fixed Rates - Down Variable Rates - Up

As the five year bond yield sags due to uncertainly about growth prospects in Canada and around the world, our Panel believes fixed mortgage rates could fluctuate by +/-0.10% in July but will effectively stay where they are for the time being.

The Bank of Canada''s next Monetary Policy Report is due on July 22nd, and this should give a better indication of the level of uncertainly in the market. A strong demand for residential mortgages by lenders is also stated as a key driver for keeping fixed rates level.

There's a saying that when a storm is brewing it's best to sit tight, and that's just what our experts think the Bank of Canada will do at their next interest rate meeting at the end of July. Given an expected dip in Canadian consumer spending, widespread unemployment in the US and Europe, global fears of deflation, and debt levels that are threatening to put whole countries out of business - there's just too much going on right now to justify a rate increase.

In this environment, the Bank of Canada is unlikely to increase interest rates in July, so variable mortgage rates will remain unchanged.

Video Summary - July 2010

This Month's Panelists

Dan Eisner


True North Mortgage

Fixed Rates - Unchanged Variable Rates - Up

Fighting national deficits is bad for jobs but good for mortgage rates. Rates will remain low.

Variable mortgage rates: Too much economic headwind to start increasing prime now.

George Hugh


Taurus Mortgage Capital

Fixed Rates - Down Variable Rates - Unchanged

The media is once again talking about everything and anything that could go wrong with the global economy! No more stimulus, lots and lots of job loss, a weakening European market, slumping equity markets etc. The reality is that we will see rate hikes, but maybe not as fast as once expected. Rates will fluctuate +/- 10 bps with the likelihood over the short term being to the lower end. Again, this is a result of strong demand for residential mortgages rather than due to market driven conditions.

With the speed of a rising overnight rate being potentially slower, both lenders and brokers continue to recommend VRM mortgages to their clients which are accounting for 60% to 70% of mortgage originations. At prime minus 60, this rate continues to be very attractive to borrowers especially in comparison to current 5 year fixed mortgage rates.

Gregory Klump

Chief Economist,


Fixed Rates - Unchanged Variable Rates - Up

The five-year mortgage rate has been going nowhere fast. The five-year benchmark bond yield, to which the five year mortgage rate is closely tied, has been sagging recently, in part due to rising uncertainty about economic growth prospects. I expect five year mortgage rates in Canada to remain at their current level until at least July 22nd, when the Bank updates its economic outlook in its Monetary Policy Report. I expect the report will acknowledge that there remains considerable uncertainty surrounding the outlook, which will be friendly for long-term mortgage rates.

The Bank of Canada continues to signal that it is leaving its options open regarding the next interest rate announcement on July 20th. Economic developments following the rate increase in June are unlikely to dissuade the Bank that the need has passed for emergency level interest rates. I expect it will raise rates by another quarter of a percentage point in July, but I still think it will pause at some point later this year.

Dr. Ian Lee

Program Director,

Carleton University

Fixed Rates - Unchanged Variable Rates - Unchanged

Housing demand and thus mortgage demand is slowing down, partly because of the high ratio mortgage policy changes announced by Flaherty and partly because demand and supply are coming into balance due to the past several months of aggressive activity.

The latest job numbers from the US are terrible while the Canadian seems to be slowing down and Europe is stalled with over 10% unemployment. There is increasing discussion of a double dip recession and some economists are suggesting it looks like 1932. In this environment, the Bank of Canada will not raise rates this month.

Garth Turner


Former MP

Fixed Rates - Down Variable Rates - Up

Stocks are in a funk and bonds are rallying. That means yields are near historic lows and bond prices are making smart investors rich. Our banks will surely try to capitalize by seizing every change to trim rates and see to blow on housing's embers. So, another 10-20 basis points could be shaved from long term rates over the coming month.

The world has changed in the past month and deflation stalks the land, scaring the crap out of policy makers who thought cheapo rates would save the world. It didn't. Real estate is now in a melt. So look for the Bank of Canada to defer its July 20th rate hike, or just add one quarter of one per cent - if the economy indicators are positive in the few days prior.

July 14 update:The latest jobs report is comforting for those who found work, but largely meaningless as an economic event. Half the positions were part-time. A good chunk of the full-time jobs fell into the nebulous 'self-employed' category. And this could be the G20 jobs effect at work - temporary positions as governments threw around $1 billion building fences and welding person hole covers.

It will require two or three months of boffo jobs data before fundamental views change. However, the Bank of Canada is looking for every excuse it can get to normalize rates. This is one.