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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?

July 2011 Overall Summary

This month's message is clear... not much is happening on the mortgage rate front. Expect both fixed and variable mortgage rates to stay put with possibly a slight increase to fixed rates over the coming weeks.

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One of our panel members says it well this month; "With all of the Bay Street Traders enjoying their cottages I don't see any real movement [in fixed mortgage rates] in the next month or two."

House prices are expected to drop which will cool the market as likely new homeowners postpone their purchase in anticipation of lower prices. Bond yields are only slightly starting to increase which will ultimately lift fixed mortgage rates but not by much.

Again, we are at the mercy of the US and Europe when it comes to the Bank of Canada making any changes to interest rates.

Our job growth in Canada is strong, but unemployment is still on the raise in the US (read more about it here). The Canadian government is making debt reduction a priority, while our neighbors in the South are talking of yet another round of stimulus and the European leaders seem unable to resolve their default issues.

For these reasons we can expect Governor Carney to hold off on interest rate increases when they meet next week and possibly even again in Sept. This means that variable mortgage rates will stay where they are.

This Month's Panelists

George Hugh - President, Taurus Mortgage Capital

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Dr. Ian Lee - Program Director, Carleton University

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The latest analysis by the TD Bank suggests a market correction downward in housing prices, will likely cause new homeowners to postpone their purchase in anticipation of lower prices. In turn, this will reduce demand for fixed rate mortgage financing, in addition to the ongoing slowing of demand occasioned by the GoC properly tightening the eligibility requirements for high ratio mortgages.

The ongoing remarkable failure by the European leadership to address, let alone resolve, the growing Eurozone debt crisis and the ongoing inability of the US political leadership to seriously address their annual $1.5 Trillion deficit and $14 trillion debt, clearly suggests that Governor Carney will think many times before raising interest rates now or in the fall.

Elisseos Iriotakis - President, Safebridge Financial

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With all the Bay Street Traders enjoying their cottage I don't see any real movement in the next month or two. With the Canadian economy chugging along at a good pace, one would think that bond yields would be pushed up, however our struggling neighbours to the south keep us at bay.

When Alberta produces more jobs in a month than the entire United States of America, something just doesn't make sense. As much as Governor Carney would like to start raising the overnight lending rate, unfortunately he can't move too far ahead of his biggest trading partner. Status quo until late fall.

Dan Eisner - President, True North Mortgage

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It looks like we are back onto the uphill portion of the mortgage roller coaster again. We expect 5 year fixed rates to increase 0.25% over the next 45 days.

Despite some inflation risk, the Bank of Canada will be hesitant to move the prime rate higher without a parallel movement in the United States for fear of driving the Canadian dollar even higher.