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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?

March 2013 Overall Summary

Both fixed and variable mortgage rates are to remain unchanged as Canadian economic factors show only sluggish improvement. While BMO has reintroduced its discounted 2.99% mortgage, broker rates have remained below 2.80% for weeks, and a slower than usual housing market will counter the typically hot spring mortgage season. While bond yields have seen a slight downturn over the past month, it is anticipated that they're to remain close to current levels, leading to no significant movement for fixed mortgage rates. Slow economic progress has also prompted the Bank of Canada to maintain its interest rate, leading to no change for the time being for variable mortgage rates.

Fixed RatesUnchanged Variable RatesUnchanged

Though spring usually signals a heating mortgage market, the effects of last summer's CMHC mortgage rule changes are still taking hold. The housing market is expected to remain soft throughout the spring season, and while bond yields have experienced a slight downturn, fixed mortgage rates are not anticipated to move from their already record-low levels in March.

A combination of slow national and global economic growth has prompted the Bank of Canada to maintain its Overnight Lending Rate at 1% in its March 6th announcement, with no upward movement anticipated until early 2014. Therefore, variable mortgage rates are to remain unchanged for the foreseeable future.

This Month's Panelists

Dan Eisner - President, True North Mortgage

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Like my son in front of his Minecraft game, fixed mortgage rates aren't going anywhere any time soon.

We have seen some pencil sharpening recently to the pricing of variable rates but Canadians in general do not seem interested in variable rate options.

George Hugh - President, Taurus Mortgage Capital

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Along with the spring market usually comes mortgage pricing wars. Due to a so called slower housing market and in general riskier global and domestic markets, the wars are NOT likely to happen. All said and done, rates usually trend down, and this year they will stay just where they are which is not a bad thing at all. Take advantage now before it's too late. Rates will remain steady over the next 30 to 45 days.

Expect VRM pricing to get a little more competitive. The Prime rate is likely to stay at 3.00% for the indefinite future, starting to see discounts to Prime in the 30 bps to 40 bps range or rates of 2.60% to 2.70%. VRM pricing will be biased to the downside over the next 30 to 45 days.

Mark Kocaurek - Senior Vice President, ING DIRECT

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The prospect of higher inflation appears to be well in the future and as a result I believe that term bond yields will remain close to their current levels for the foreseeable future as will fixed term mortgage rates.

Canada's 4th quarter GDP growth indicated very tepid growth levels and inflation worries for the Bank of Canada should be far off in the future. As a result the Bank of Canada will be on hold for the foreseeable future with regard to its overnight rate. Variable rate mortgage rates will remain unchanged.

Dr. Ian Lee - Program Director, Carleton University

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The nascent mortgage war started by BMO – snuffed out by the Finance Minister and the opposition parties that piled on with the Government - vividly provided evidence of the slowing real estate market and thus demand for mortgages. The mortgage rule changes announced last June by the Government of Canada have been effective in slowing demand for and growth in Canadian residential realty markets. However, although demand is declining, the Government of Canada effectively announced a de facto floor of around 3% for the 5 year fixed. Instead of allowing healthy competition – given the Government controls the rules that determine credit quality i.e. down payment required, maximum amortization allowed and maximum GDS and TDS – the government intervened in competitive markets to prevent competition. This was a mistake. IF the government is worried about underlying credit quality, it possesses the levers to make further changes to the rules. It should not be intervening directly in competitive markets.

There will be no central bank rate increase for the near future as economic growth in Canada and U.S. is below forecast. Europe continues to exceed our very low expectations for bad policies as demonstrated by the election of the "two clowns in Italy" – see latest Economist magazine cover story. Meanwhile, in the U.S., a different alternate reality prevails where the $85 Billion in sequester cuts totalling 2.3% of total U.S. Government spending of $3.6 TRILLION were characterized by the U.S. President and his party as "catastrophic". With that level of understanding, it would not appear that strong growth is imminent and thus no rate increase can be expected.