5yr @ 3.64%* – 3.79%

4yr @ 3.49%

3yr @ 2.90%

*some conditions apply (i.e. prepayment flexibility etc)

How are Fixed Mortgage Rates determined?

The Canadian government and the Bank of Canada both play a major role in setting fixed mortgage rates. Fixed mortgage rates are influenced by the major bond yields. Bonds have always been considered a safer investment than equities and stocks. This is especially true when considering Government bonds.
When an economy is booming, most investors will invest in stocks and equities because they will earn a higher rate of return. This causes demand for bonds to decrease.  When this happens, the bonds must increase the yields of the bonds to entice investors.
When an economy is in a recession (much like today), investors will search for a safe place to store their money. Stocks will decrease or have a negative yield, which will cause investors to put money into bonds. This will cause bond yields to go lower because of the increased demand.

When the economy changes, the government of Canada is forced to increase or decrease long term bond prices. When this happens, it will reduce or increase the lending costs for banks. The banks will then pass on these new rates to borrowers by increasing or decreasing fixed mortgage rates.

For more information about rates and where we currently stand in the grand scheme of things, please don’t hesitate to give me a call.

Meaning what?  The BoC will now (more than likely) leave well enough alone for the foreseeable future.  Although… we’ve heard that before.  The next interest rate meeting is September 8th.  Below is a chart of where we’ve been over the years. (Click on it for a bigger view)

5yr Fixed @ 4.04%

3yr Variable @ 1.80% (Prime -.70%)

If you’re renewing, refinancing or purchasing… Call me NOW to hold these great rates!

I hope you’re enjoying a great summer so far!

Please enjoy the following: Historical Rate Charts – Fixed and Variable.  (Please click on graphs to open in full-sized window)

(Courtesy of Firstline Mortgages – A Division of CIBC)

After more than a year at a record low level, Bank of Canada Governor Mark Carney raised the benchmark interest rate for the first time since 2007 by one-quarter percentage point to 0.5 per cent. This is the first time since 2007 that that rate has increased and the Bank of Canada is the first in the Group of Seven to do so since the financial crisis and recession began in 2008.

In a statement Carney emphasized that the increase should not be interpreted as just the first of more to come.

“This decision still leaves considerable monetary stimulus in place, consistent with achieving the 2 per cent inflation target in light of the significant excess supply in Canada, the strength of domestic spending and the uneven global recovery,” the central bank said.   “Given the considerable uncertainty surrounding the outlook, any further reduction of monetary stimulus would have to be weighed carefully against domestic and global economic developments.”

What does this mean for those with Variable Rate mortgages?  If lenders raise prime rate by 1/4 point, as expected, homeowners with variable mortgage payments will see roughly $12 of monthly payment increase per $100,000 of mortgage.  A little higher than record lows, but certainly still manageable.

On a positive note, the BoC also reassured Canadians in its statement. It said, “This decision still leaves considerable monetary stimulus in place.” Variable mortgage rates, for example, are still under 2%.  That’s just a tick above their all-time bottom.

Some experts are predicting Bank of Canada interest rate hikes are less than three months away after Statistics Canada reported core inflation jumped to 2.1 per cent in February. This compares to the central bank’s outlook of a 1.6 per cent average core inflation rate in the first quarter of 2010.

“We’re progressively leaving the recovery phase,” Yanick Desnoyers, assistant chief economist at National Bank Financial in Montreal told the Globe and Mail. He added policy makers “are going to change their tone on the economy in April, and they’re going to move in June. The longer they wait, the more aggressive they’ll have to be.”

Inflation wasn’t predicted to reach the Bank of Canada’s two per cent target until the third quarter of the year and some are saying the effect of the Olympic Games in Vancouver – which drove up costs, particularly in the hotel sector – caused the jump. The inflation numbers also contributed to a surge in the Canadian dollar, which hit a high of 99.38 cents U.S. on Friday.

“[This] report must be turning heads at the Bank of Canada,” economists Derek Holt and Karen Cordes Woods at Scotia Capital told the Financial Post. “While the details are mixed on the underlying components, it is pretty difficult to argue that emergency rates in Canada [of 0.25%] are still warranted.”

In contrast, the Post said economists at TD Securities don’t expect the Bank of Canada to over-react to the new number because “one-off factors” are well-identified.

The next BoC rate meeting is April 20.

90 Day Rate-Hold available. Call John now for more information!

(604) 710-1500

Once again, the Bank of Canada announced it would keep the key interest rate at a record-low 0.25 per cent to achieve its inflation target of two per cent.

While the Bank said economic growth in Canada resumed in the third quarter of 2009 and there has been a slightly higher than expected rate of inflation in recent months, it reiterated that the economy is still lagging, particularly due to factors like a strong Canadian dollar and low levels of U.S. demand.

Repeating many of the same projections as its October monetary policy report, the Bank predicted the economy to return to full capacity and reach a two per cent inflation rate in the third quarter of 2011. It forecast the economy to grow by 2.9 per cent in 2010 and 3.5 per cent in 2011.

The next Monetary Policy Report will be released Friday and the next rate announcement will be made March 2.