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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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December will not be a month of change for either Canada's economic standing, or mortgage rates activity. Uncertainty regarding European fiscal growth lingers, and Canadian bond yields have remained consistent, leading to no change in fixed mortgage rates. Variable mortgage rates are also stable, due to slower than expected GDP growth and the Bank of Canada keeping the Overnight Lending Rate at one per cent in the December 4th Rate Announcement.

Fixed Rates - Unchanged Variable Rates - Unchanged

Government of Canada bond yields have remained stable despite lower than expected performance for Canada's GDP growth, leading to a neutral interest rate environment. As a new record low of 2.77 per cent was reached early in the month for fixed mortgage rates, our experts anticipate rates will hover around the three per cent mark for preferred clients, with no notable change for the month of December.

The Bank of Canada has once again maintained the Overnight Lending Rate target at one per cent, and historically low discounted fixed mortgage rates provide consumers with little incentive to choose a variable rate. As Canadian economic growth remains weak, it is not anticipated that variable rates will change in the near future.

This Month's Panelists

Mary Zenar

Managing Director of Zenar Financial,

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While the five-year government of Canada benchmark bond yield has been bouncing around the 1.25 to 1.51 area for the past quarter, it has held a steady average at the 1.37 mark. This trend is expected to continue along with stagnation in the Canadian marketplace. European uncertainty is also a contributing factor, as global leaders agree to release $57 billion in critical loans to Greece in efforts to stabilize the Greek economy. With all this activity, it doesn't look like fixed rates are in for a change.

Experts were correct in not anticipating a surprise interest hike in the December 4th Bank of Canada Rate Announcement - most aren't anticipating any change at all until the third quarter of next year. When rates do increase, it will be by a moderate step - no more than a quarter per cent.

Dan Eisner


True North Mortgage

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Bond yields have been steady and banks are hungry so we will continue to see the best clients getting rates at or just below three per cent.

Banks and Canadians in general do not seem interested in variable rate options with five-year fixed rates so low. As a result, we don't foresee any changes to the variable rates in the next while.

Dr. Ian Lee

Program Director,

Carleton University

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Canada's mortgage brokers – some of whom I worked with 40 years ago in the 1970s – are in a deep funk at the slowdown in the housing market.  Some brokers send me angry emails as they know I support the changed underwriting rules.  However, to quote the late PM Trudeau in 1980, "the world is unfolding as it should".  Our mortgage lending rules started to look suspiciously similar – if not identical – to the failed U.S. Congressman Barney Franks and Senator Chris Dodd watering down of the underwriting rules that led to the U.S. housing bubble and collapse. The difference is that we woke up in time to tighten the underwriting rules and yes, Virginia, the changes are causing a slowdown in home buying and mortgage applications.  That is what the rule changes were supposed to do!  Bill Gross of PIMCO calls it the "new normal".  I call it the "old normal".  Remember when we required a 10 per cent down payment for high ratio and 25 per cent down payment for conventional mortgages? It's back to the future or forward to the past!

Just as we "lent" Governor Mark Carney to UK and EU to help clean up their banking sector and get their economies moving, the Q3 data came in for Canada's economy.  The numbers did not make us smile with 0.6 per cent increase for the three months.  Exports dropped to the lowest level in three years reflecting the very poor economy in Europe and the mediocre economy in the U.S.  There will be no talk in the near future about any central bank rate increases with such weak growth.

Elisseos Iriotakis


Safebridge Financial

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Bond yields have retracted from a few weeks back after the lower than expected GDP numbers came out at the beginning of the month. Slower growth and a steady inflation rate mean that we will have a very neutral interest rate environment for some time. Consumers with strong credit and good job security will continue to receive rates in the sub-par three per cent range for five-year fixed terms and shorter.

The Prime lending rate will remain at three per cent for the foreseeable future. The Bank of Canada just can't afford to increase rates as it will increase foreign investments and thus strengthen the Canadian dollar further; leading to a slowdown to exports and eventually job losses - something that Canada can't afford to see happen.