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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?

June 2012 Overall Summary

Canada continues to proceed with caution amidst fears of the impending European crisis. Government of Canada bonds continue to be attractive to international and Canadian investors alike, and the Bank of Canada's rate is expected to remain on hold. The Mortgage Rate Outlook? Fixed is due for a dip and variable rates look to remain unchanged.

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European crisis fears continue to drive investors toward the relatively safe haven provided by Government of Canada bonds. Taking their cue from decreased bond yields, our panelists expect fixed mortgage rates to dip over the next 30-45 days.

The Bank of Canada is staying put in the face of European unease, keeping a consistent hold on their key interest rate for the foreseeable future. Our panel does not anticipate this changing until Fall 2012.

This Month's Panelists

Mark Kocaurek - Senior Vice President, ING DIRECT

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Longer term bond yields and swap spreads have trended downward in Canada over the last couple of weeks primarily due to renewed fears of further crisis in Europe, the result of which is a cheaper cost of funds for lenders. I anticipate that fixed term mortgage rates are likely to move lower in the short term.

Continued fears of economic crisis in Europe and the potential knock-on effect for Canada will likely keep the Bank of Canada on hold with regard to its overnight rate for the foreseeable future. As a result, I believe that variable rate mortgages are likely to stay unchanged in the near term.

Dr. Ian Lee - Program Director, Carleton University

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The fiscal failures in Europe have highlighted Canada as a safe haven driving bond buyers to Canada to buy Government of Canada pushing down bond yields. The European mess is influencing Canada's mortgage market.

Given the ongoing and increasing uncertainty over the Eurozone crisis and the stalling of the US economy revealed by the anemic job numbers as fiscal stimulus recedes, and Canada's less than robust growth numbers, it is very unlikely that Carney will increase rates.

Dan Eisner - President, True North Mortgage

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Greek problems have resurfaced and will keep bond yields in check for the next few days. If we see any movement, it will be down.

It has been a while since we have seen variable rate discounts improve. The next few weeks could finally bring some relief to this situation.

Elisseos Iriotakis - President, Safebridge Financial

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The government is on a full court press to convince consumers that higher rates are ahead of us, but the bond market tells a different story. We expect fixed rates to drop a bit more in the next 30 - 45 days and wouldn't be surprised if we saw the 4 and 5 year fixed terms at 2.99 per cent once again.

As long as Europe has major issues, I don't see the Bank of Canada raising Prime. In fact, we may see banks resort back to a much healthier discount off of Prime in the next few months. One lender rolled out Prime - .40% so it is only a matter of time before others follow suit. Here's hoping that the Prime - .90% days come back soon.

Wayne Spinney - Mortgage Agent, Centum Mortgage Professionals

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The instability of global economic markets abroad have many investors turning their heads toward Canada and the peace of mind provided by Government of Canada bonds. Increased demand has pushed up the price of bonds and as a result, bond yields have decreased in the interim. Decreased bond yields signal a corresponding change to fixed mortgage rates; therefore I think that we will see a decrease in fixed mortgage rates over the next month.

The Bank of Canada is scheduled to meet on June 5, 2012 to discuss a possible increase to the overnight lending rate. Personally, I don't anticipate that there will be any changes made to the benchmark rate until fall 2012. If this forecast is correct, then we will not see any changes to the prime lending rate and variable rates will remain the same.