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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?

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Spring is typically the most competitive time for mortgage-rate pricing, and this season has been no exception, as a number of lenders introduced record-low pricing during the month of March. Now, April buyers and renewing borrowers have much to smile about, as RateSupermarket.ca's expert panel calls for continued access to such deals throughout the warmer months.

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Demand for government of Canada bonds have set the stage for low fixed-rate pricing; current geo-political forces have kept yields under the one per cent barrier for months, with no change anticipated in the short term. As a result, our panelists call for continued low-rate pricing as lenders compete for spring market share.

All eyes are on the Bank of Canada's April 15th rate announcement, especially as sliding oil prices spell bleak news for several economic sectors. However, it's unlikely that the BoC will make another move to cut rates at this time; policy makers are likely waiting to see how the effects of oil are realized before employing further "insurance" measures.

This Month's Panelists

Dan Eisner


True North Mortgage

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Bond yields and mortgage rates remain very low. We are into the spring home buying season and we often see mortgage specials at this time of the year so we never know what a bank may release.

The price of oil has appeared to stabilize so it is very unlikely we will see another Prime rate decrease by the Bank of Canada.

Will Dunning

Chief Economist,

Mortgage Professionals Canada

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Bond yields remain extremely low. For 5-year Government of Canada bonds, yields have been in the range of 0.75% for the past two months. This is considerably lower than we can reasonably expect for the inflation rate for that same 5-year period. Thus, current interest rates are very stimulative, and we should expect that rates will rise before long (but not by very much). Around the world, there are signs that economies are slowing, and this is delaying the upward adjustment of interest rates. Rates for fixed-rate mortgages have fallen during the past month (having gradually adjusted to the drop of bond yields). They are currently at their lowest level ever (they could conceivably fall a bit more, as the spread between bond yields and mortgage rates is still larger than average). But, we should expect that mortgage rates won't stay this low for more than a few more months.

There has been a lot of speculation about whether the Bank of Canada will further reduce its overnight rate (on top of the surprise drop that occurred late in January). My expectation is that the next policy meeting (April 15th) is too soon for another reduction, that the Bank will wait to see how the economic numbers develop. There is a strong possibility that by the next meeting date (May 27th) there will have been a preponderance of negative economic reports and we might see a further quarter point reduction by then. This should lead to a corresponding drop in lenders' prime rates and rates for variable rate mortgages.

Dr. Ian Lee

Program Director,

Carleton University

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I agree with my fellow panelists that the 5-year bond yield dropped precipitously - largely due to the dramatic decline in oil prices. And, I too think the market overshot due to pessimism that has taken hold concerning Canada's economy, notwithstanding that oil and gas are only 6% of GDP and a third of exports. Analysts persistently ignore the vibrant services economy which employs 16 million of 18 million Canadians. Therefore, I cannot see fixed rates going lower, especially as the Canadian economy slowly starts to recover in Q2 and the rest of the year.

Governor Poloz has had a very bad month with his critics who have found his comments confusing and contributing to uncertainty. Yet, if we read the January MPR and the speeches of the governor and deputy governors, they are not as pessimistic as the headline quotes. More importantly, while Poloz did say Q1 would be "atrocious", he has also stated the economy would recover in the following quarters. Indeed, the BoC reduced its forecast to approximately 2% real growth for 2015 for Canadian GDP. He also stated that the output gap would be eliminated now before 2017. And inflation is still forecast at 2%. For these reasons, it is unlikely the BoC will decrease its rate again in April.

Kelvin Mangaroo

President of RateSupermarket.ca,

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It's been a typically competitive spring thus far; in March several small lenders set a low rate precedent in the 2.40-range, while BMO and TD established a new bottom among the big banks at 2.79% for a five-year fixed term. However, while we can expect to witness continued price skirmishes within a narrow range, bond yields are not anticipated to fluctuate sufficiently to warrant any dramatic change in pricing. We can expect to see fixed rates continue along their current trend throughout the spring months.

Speculation over the Bank of Canada's next move continues, as the fallout from lower oil prices is increasingly realized within Canada's economic big picture. However, despite Stephen Poloz's declarations of our economy's "atrocious" state, communication from the Bank has consistently indicated conditions will improve this quarter. And, regardless if Poloz still backs that forecast, it's unlikely the Bank will squander the monetary policy tools at their disposal so soon after January's rate cut. I believe the Bank will continue to wait out oil's effects before jumping to its next rate conclusion.