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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?

February 2014 Overall Summary

Fixed mortgage rates have the capacity to drop this month, as bond yields have trended lower during January and the start of February. Variable rates, however, aren't expected to budge as the Bank of Canada sticks to the status quo on growth and inflation benchmarks.

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Bond yields have trended lower over the month of February, prompting some lenders to lower their five-year fixed mortgage rates as low as 2.99 per cent. As long as unstable market factors linger, the possibility of further rate reductions remains.

Despite a weaker Canadian dollar, it's unlikely that the Bank of Canada will take the opportunity to raise its central interest rate; growth and inflation levels are still far below their benchmarks. It is not anticipated that variable mortgage rates will change this month.

This Month's Panelists

Ron Butler - Mortgage Broker at Verico Butler Mortgage

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Predicting the long term bond yields that drive mortgage rates is a chance-y prospect at best. The calm reaction to continued tapering by the U.S. Fed caught short sellers and, combined with Canadian currency moves, pushed two-year through 30-year yields down. Two-year through seven-year mortgage rates dropped accordingly. It looks like there may more downside possibilities so we may see further rate reductions in February.

It is almost always a certainty that the Bank of Canada Prime Rate will not increase; therefore it is not expected that variable mortgage rates will change this month.

Dan Eisner - President, True North Mortgage

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Bond yields have been steadily dropping the last few days as the stock market continues to get rocked by jittery investors. If this continues we may again see five-year mortgage rates hit 2.99 per cent.

The declining Canadian dollar will give the Bank of Canada some breathing room to raise the prime rate if they want. But they don't want to, not now and not for a while.

Dr. Ian Lee - Program Director, Carleton University

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The Bank of Canada five-year rate trended down slightly since December and indeed some lenders broke under three per cent. Nonetheless, the yield on five-year Bank of Canada bond is inching up ever so slightly.

Inflation is still well below the targeted two per cent range. Indeed, it around 0.7 per cent - well below the target – suggesting deflationary rather than inflationary forces. There is no evidence in the economic growth, employment or inflation numbers of a central bank increase in 2014.

Kelvin Mangaroo - President of RateSupermarket.ca

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We've already seen some lenders lower their fixed mortgage rates to 2.99 per cent this month, as bond yields trend low over January and February due to unstable market conditions. As long as these factors remain, we could see further discounts before the month is through.

While a weaker Canadian dollar may help strengthen our export industry as an economic driver, inflation is still too far below the mark to justify an increase to the Bank of Canada's central rate in their March announcement. It is not anticipated that variable rates will change in the near term.