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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?

April 2012 Overall Summary

Fixed mortgage rates will be on the rise in April, while variable mortgage rates will remain stable, says the RateSupermarket.ca Panel of Mortgage Experts.

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The pricing wars that sent fixed mortgage rates to historical lows in March seem to be over (for now). The record low rates were an attempt to snap up market share early in the year and get a jump on the peak home buying season, but those rates were unsustainable according to the Expert Panel.

With the increase in bond yields and persistent political and media attention around house prices and consumer debt levels, we should see fixed mortgage rates increase during the month of April.

Dr. Ian Lee says it well this month: "Governor Carney does not have many degrees of freedom given the continuing rock bottom Federal Reserve rates".

Our Panel members believe that inflation remains in check, the provincial election is heating up in Alberta, and the risks to global economic growth remain biased to the downside. All these factors combined mean the Bank of Canada is unlikely to make any change to interest rates when they meet on April 17th. As a result, Prime rates and discounts off of variable rate mortgages will remain stable in the short-term.

This Month's Panelists

Mark Kocaurek - Senior Vice President, ING DIRECT

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Several of the big bank lenders ended the month of March with some very aggressive pricing (such as 2.99% for 5 years) in the fixed terms. Recent comments from some Executives of the big bank lenders suggest that they believe that these price levels were unsustainable. Additionally, lender's cost of funds have increased somewhat over the last couple of weeks driven primarily by widening swap spreads. Political and media attention to housing prices continues persist. As a result, I believe that in the short term fixed rates will rise.

The rate of growth in the Canadian economy continues at an anaemic pace and as a result inflation remains relatively tame. The risks to global economic growth remain biased to the downside. For these reasons I believe the Bank of Canada will leave its overnight rate unchanged in the short term and as a result variable rate mortgage rates will remain unchanged.

Dr. Ian Lee - Program Director, Carleton University

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Fixed rates have never ever been this low historically. Evidence suggests the mortgage rate wars are over, in part because the banks have indicated this and in part because the Department of Finance has frowned on these mortgage wars. It is also not good for bank profit margins. Thus, I conclude that fixed rates will start to slowly trend up.

Governor Carney does not have many degrees of freedom given the continuing rock bottom Federal Reserve rates. Moreover, the war of words between Alberta and Ontario over the "petro dollar" will heat up with the election of Danielle Smith, Wild Rose Party expected next week. Thus, it is doubtful that Gov Carney will want to step into that debate by increasing the bank rate which will put upward pressure on the dollar, thereby throwing gas on the fire.

Dan Eisner - President, True North Mortgage

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Many lenders just increased their fixed rates by .25% to .5%. This brought them to a more sustainable spread and thus rates won't move much over the next few weeks.

No news, means nothing happens. Prime rate and the discounts off of prime will remain stable for the next few weeks.

George Hugh - President, Taurus Mortgage Capital

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Along with the spring market usually comes mortgage pricing wars, this year due to riskier markets and narrowing profit margins the wars were very short lived. Though the overnight lending rates remain intact, yields have been increasing due to global market uncertainty. Expect this trend to continue with a bias towards fixed rate terms of 5 years and greater. "All good things eventually come to an end". "What comes down must go up". Even though rates are on the rise, take advantage now before it's too late. Rates will remain steady with a bias to the upside over the next 30 to 45 days.

Expect VRM pricing to stay in close proximity to Prime (3.00%). VRM pricing will remain unchanged over the next 30 to 45 days.

Wayne Spinney - Mortgage Agent, Centum Mortgage Professionals

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We've already seen rates beginning to creep up in the month of April and I think that this is a movement that will continue. Since the major banks pulled the low 2.99 per cent 4 and 5 year fixed rates at the end of March, fixed rates have been returning back to "normal" (funny that fixed rates in the 3 percent range are now the new norm!). The Bank of Canada's 5 year benchmark bond yield has also been trending upwards which indicates that a similar movement in fixed rate mortgages is to come.

Although the U.S. has experienced an improvement in the performance of their economic indicators, the U.S. Federal Reserve isn't expected to make any rate increases until as late as 2014 (according to the experts). The U.S. is still slow to recover and the idea of rates increasing prior to the U.S. wouldn't leave the Canadian economy in an ideal position. I expect that next week (April 17th) the Bank of Canada will leave the overnight lending rate unchanged and therefore prime and variable rates will remain around current levels.