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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?

December 2013 Overall Summary

Fixed mortgage rates will see slight discounting this month, as bond yields remain low amid slow but stable economic improvement, both in Canada and internationally. However, such gains are still below growth benchmarks, leading to no change in the Bank of Canada's rate stance, and as a result, variable borrowing costs.

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Government of Canada bond yields continue to see slight downward pressure, as investors remain confident that national benchmark rates will remain low. Market fluctuation as a result of U.S. monetary policy has also subsided, as the Fed appears to have deferred any changes to quantitative easing until the new year. As well, new government-imposed risk fees to the CMHC are not anticipated to have adverse effects on the availability of mortgage insurance in the near future. As a result, fixed mortgage rates will see slight discounting this month.

An increase to the Bank of Canada benchmark rate is not anticipated prior to late 2014, as sufficient slack remains in economic output to allow the rate to remain at its current one per cent.

This Month's Panelists

Ron Butler - Mortgage Broker at Verico Butler Mortgage

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The tapering news and rumors swirling around the U.S. Fed seem confusing at times, but the bond market voted with its feet and fixed bond yields remain in the low 170s on five-years, indicating not much change in fixed rates for the upcoming month.

With the Prime rate certain to stay the same and Libor swap rates falling, the outlook is positive for variable rate mortgages. The farther off into the future a change in Canadian Prime rate is pushed, the better the news for borrowers with variable mortgages.

Dan Eisner - President, True North Mortgage

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Canadian bond yields have been flat for the last few weeks. As a result we don't expect mortgage rates to fluctuate much in the coming days and weeks. Of course this can change suddenly if the Bank of Canada makes an unexpected statement during the next rate announcement.

We will have to see a sustained recovery in the U.S.'s economic situation before we start seeing the Banks change their variable rates. As a result, we don't foresee any changes to the variable rates in the near future

Dr. Ian Lee - Program Director, Carleton University

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The five-year Bank of Canada bond rate is down very slightly. Indeed, the continued uncertainty in the U.S. and Canada, manifested in the weak recovery, is reflected in the bond rates. Moreover, the Minister of Finance has announced yet another round of mortgage insurance tightening focused on CMHC with the imposition of a risk fee. This provides additional evidence of the government's intention to induce a further slowing of the housing market and thus demands for mortgage financing which will impose downward pressure on fixed rates.

The release of the most recent Bank of Canada reports and comments thereto in addition to the IMF report reveal what we already know. The recovery is not as robust as it should be by this point in the cycle. There will be no central bank rate increase before late 2014 at the earliest if comments by the Federal Reserve and Bank of Canada are credible.

Kelvin Mangaroo - President of RateSupermarket.ca

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While the Department of Finance recently imposed a $50-million annual risk fee on the CMHC, the Crown Corporation has stated such measures will not negatively impact the availability of mortgage insurance funding. While some analysts speculate the change could bring about a slight mortgage rate increase in the new year, current bond yield levels face downward pressure, as Canadian benchmark rates remain unchanged, and U.S. Fed QE fears have been deferred until 2014. As a result, fixed mortgage rates may see some slight discounting this month.

Ever since the BoC dropped their rising rate bias in their last announcement, there have been contrasting analysis on whether the benchmark rate will rise again in the near future - while the OECD has called for an increase as early as next year, other sources such as the IMF have stated there is sufficient economic slack to allow rates to linger at one per cent until 2015. As economic growth still remains below target, there is no reason to anticipate a Bank of Canada rate change this month.