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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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You can't rush a recovery - no matter how hard you try. With some of the world's largest economies still struggling, the Bank of Canada is waiting patiently before making a move to increase interest rates which will also cause variable mortgage rates to rise. Fixed mortgage rates, on the other hand, will stay low as homebuyers retract from the market.

Fixed Rates - Unchanged Variable Rates - Unchanged

We've seen lower fixed mortgage rates over the past few weeks, and our Mortgage Rate Outlook Panel believes this mortgage rate trend will stick around. Home sales are slowing, warnings continue about over leveraged consumers and bond yields have dropped. As the demand for mortgages continues to soften, expect to see enhanced competition from lenders for new customers.

It was no surprise that the Bank of Canada held its key overnight lending rate at 1 per cent at their last meeting on May 31st. Our Panel believes we might be in for a few months of inactivity from the Governor before we see another increase.

Although Canada's economic performance warrants higher interest rates, if we make a move ahead of the pack we'll risk a spike in the Canadian Dollar and a negative impact on manufacturing and exports in general. So as the US and Europe struggle with unemployment, sluggish recovery and debt, Canada will sit and wait for the right time to move.

This Month's Panelists

Mark Kocaurek

Senior Vice President,


Fixed Rates - Unchanged Variable Rates - Unchanged

Bond yields have declined quite dramatically over the last few weeks primarily in response to growing market concern over future global prospects and the rising possibility of another financial event such as a default by Greece. On balance I believe that in the short term these concerns will remain unabated and as a result bond yields and fixed term mortgage rates will remain close to today's levels.

Based solely on Canada's recent relatively robust economic performance short term interest rates are too accommodative today and therefore an increase to the target Bank of Canada rate is warranted. However, many of the world's larger economies are struggling with tepid growth and this coupled with ballooning government debt levels puts the outlook for future global economic growth at risk. Slower global growth, and in particular US growth where recent economic results have been very poor, will undoubtedly impact Canada's future economic prospects. As a result I believe that the Bank of Canada will remain cautious about raising rates too soon and will likely not raise its target rate until the autumn of this year at the earliest.

Dr. Ian Lee

Program Director,

Carleton University

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Home sales are slowing as consumers react to more restrictive mortgage regulations announced in January by the Finance Minister and continued warnings by policy makers and media reports of over leveraged consumers, compounded by some analysts who claim we are in a housing bubble. Thus, demand for mortgages should continue to soften suggesting enhanced competition for customers. Moreover, the 5 year Bank of Canada rate is stable.

It seems more likely now that the Bank of Canada will not increase its benchmark rate in July, in part due to Finance Minister Flaherty who said he is quite worried about the global economy due to ongoing Eurozone debt crisis compounded by anemic economic growth in the US. These concerns were also highlighted by Governor Carney.

Elisseos Iriotakis


Safebridge Financial

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Fixed rates have already dropped over the last week or two as poor employment numbers in the U.S. discouraged investors and the economy in general. The rosy picture that Governor Bernanke has been painting over the last number of months has been a mirage. QE1 and QE2 did not work, so don't be surprised if he rolls out QE3 over the next quarter to try and artificial stimulate the markets. Won't work and for this reason rates will remain low in the short term, but in the long run all this stimulus can very well come back to haunt us with higher inflation and thus higher fixed rates.

Governor Carney would love to raise rates but I don't see this happening until the September 7th meeting, but more likely not until October 25th. Canada just can't afford to raise rates way ahead of their neighbours south of the boarder or they will see the Canadian Dollar rise further against the green back and thus have a negative impact on manufacturing and exports in general.

Dan Eisner


True North Mortgage

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Bad news brings lower rates. We have already seen a number of lenders lower their fixed rates. This trend will continue as bonds fall in the US and Canada.

The Bank of Canada will be hesitating to make any moves while the US struggles with their unemployment rates while tackling their debt issues.