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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 2014 Overall Summary

Fixed mortgage rates are to uphold the status quo this month, as Canadian bond yields remain consistent amid global economic unease. Variable mortgage rates are also not anticipated to change, as the Bank of Canada lacks sufficient motivation to either raise or lower the Prime rate.

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While the Canadian economy has experienced some positive gains, current conditions such as Canadian household debt levels, are too fragile to absorb a significant rate increase. Bond yields remain consistent, setting the tone for mortgage rates this spring.

While a low Canadian dollar could give our lagging inflation levels a much needed boost, it's not likely that the Bank of Canada will seize the opportunity to hike central interest rates in this month's announcement. It's also not anticipated that they will lower them, as Canadian household debt remains an area of vulnerability for the overall Canadian economy.

This Month's Panelists

Ron Butler - Mortgage Broker at Verico Butler Mortgage

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On the fixed rate side of the coin, bond yields have fluctuated 15 basis points, both up and down, over the last few weeks. It's best to say the mortgage rates on three-and-five-year fixed rate are quite attractive at this point in time.

I am in the camp that is certain of no increase to the Prime Rate, and equally sure there will be no decrease to Prime either. Although there are some deflationary pressures in the economy, the reality is the Bank of Canada is still a governmental agency and I do not believe it is the policy of this federal government to stimulate any further appetite for credit among Canadian consumers.

Will Dunning - Chief Economist, Mortgage Professionals Canada

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Economic fundamentals have improved in Canada, and even more in the U.S. But recent events have shown that the economy still isn't strong enough to withstand a large rise of interest rates. Current bond yields, as well as the spread between bond yields and mortgage rates, are currently about where they should be. Thus, mortgage rates are expected to stay close to the current level through this spring.

Inflation remains subdued in Canada and the U.S., and the central banks are under no pressure to change the base rates that they control. The recent weakening of our dollar will result in a temporary uptick for the Canadian inflation rate, due to cost rises for imported goods. But, the Bank of Canada is likely to view this as a temporary event that does not justify any change in policy.

Dan Eisner - President, True North Mortgage

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Bond yields have been flat in the last few days, and as a result, I expect mortgage rates to stay steady for the next few days and weeks. The recent devaluing of the Canadian dollar greatly reduces the likelihood that the Bank of Canada will reduce the Prime Rate.

We will have to see a sustained recovery in the U.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 next while.

Kelvin Mangaroo - President of RateSupermarket.ca

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While some lenders lowered their fixed offerings last month, the motive was to gain market share in anticipation of the seasonally busy spring market, and not in tandem with any significant drop in bond yields. While the recent CMHC premium increase may prompt some buyers to rush into the market before May 1, fixed rates are likely to maintain the status quo for the time being.

While a lagging Loonie presents opportunity for inflation growth, it's not enough to prompt a rate increase from the Bank of Canada in tomorrow's announcement.

Dr. Ian Lee - Program Director, Carleton University

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The five-year Government of Canada bond yield has vacillated – indeed bounced around - between 1.32 and 1.39. This suggests a relative balance between demand and supply of mortgage funds. And this is the slowest time of year for home buying. Rates should remain stable until the spring.

The economy is still sluggish. Inflation is well below the two per cent Bank of Canada benchmark. While the loonie is down around 10 per cent, the impact has not shown up in inflation numbers. Thus, it is very unlikely to see a central bank increase until mid 2015 – or even after the 2015 federal election, unless there was some completely unexpected surge in economy growth and inflation.