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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?

November 2014 Overall Summary

No November movement is expected for either fixed or variable rates; yield activity has been minimal, prompting no change to fixed rate pricing. Canada's prime rate remains in limbo as the Bank of Canada states no plan to alter variable rates in the near future, and no action is taken by the U.S. Federal Reserve.

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Five-year Government of Canada yields have moved within a very tight spread, but mortgage rates, which usually move in conjunction with yields, have not followed suit. It's expected that the current competitive pricing environment will last throughout the year.

Lingering geo-political tensions continue to put a damper on Canadian trade and home-grown economic improvement. As the Bank of Canada has stated the need for long-term stimulus, and the U.S. Federal Reserve makes no rate changes south of the border, it's expected that variable rates will remain untouched throughout November.

This Month's Panelists

Dr. Ian Lee - Program Director, Carleton University

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The five-year Government of Canada yield has been moving around a very narrow band of approximately 1.35 per cent to 1.45 per cent. This movement does not suggest a change in fixed rates.

The Fall Monetary Policy Report released on October 22. Two key phrases stood out in the Executive Summary: "Underlying inflationary pressures are muted, given the persistent slack in the economy". Then the Governing Council said, "However, the profile is weaker than in July and is diverging across regions. Growth remains reliant on exceptional monetary policy stimulus". These words clearly do not suggest any increase in interest rates any time soon.

Will Dunning - Chief Economist, Mortgage Professionals Canada

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During the past two months there have been two sharp swings in expectations about the world economy that have resulted in unexpected moves for stock markets and for bonds. During September, yields for five-year Government of Canada bonds jumped by quarter point, but then during late September to mid-October they fell by about 0.40 points. Now they are returning to the level seen before these ructions. The consequence is that mortgage rates have not changed materially.
While financial markets remain twitchy, economic conditions continue to improve gradually. That said, there is still a long way to go until there will be a need for any substantial and sustained rise in rates. My expectation is that by the end of 2015, rates for five-year fixed rate mortgages might be about one-half point higher than at present.

The Bank of Canada and the U.S. Federal Reserve clearly expect that they will not be raising their administered rates anytime soon, which means that interest costs for variable rate mortgages rates should change very little during the coming year. Analysts continue to expect that any rises for these administered rates might start about mid-2015.

Dan Eisner - President, True North Mortgage

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Mortgage rates almost looked like they were going to move but the bond yields didn't stabilize at the new pricing point. Thus, no change in mortgage rates are coming.

Combined with the tepid world economy and the lower oil prices, the central bank has little reason to increase prime. 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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Government of Canada bond yields, which set the tone for fixed mortgage pricing, have jumped 11% in the past month. Fixed rates didn't follow the drop on the way down, so they've been relatively flat and will remain competitive as the housing market enters the slower winter months.

While The U.S. Federal Reserve officially ended its bond-buying program last month, they have yet to implement any change to central interest rates, providing no incentive for Canadian rates to do so. An unstable global outlook due to geopolitical tensions have also contributed to this immobility; earlier this month, Bank of Canada Governor Stephen Poloz made comments that continued stimulus may be necessary, even after Canada's economy strengthens. As a result, variable rates will remain relatively unchanged in the short term.