Variable verses fixed mortgage rate

September 09, 2010

Bonds yields remain really low and can stay that way for some time.  This has resulted in some of the lowest 5 year fixed rate we have ever seen.  5 year rates came very close to this point in early spring but shot up in June by almost 1%.  Since June 5 year rates have been falling as the economic news around the world turned grimmer.  We don’t believe rates will fall further but we don’t think they will be going up drastically anytime soon.

The bond market has been very jumpy lately, thus making it unpredictable. Sustained positive economic news will surely send mortgage rates higher.

I am not locking in my variable rate mortgage but this could be a good time to just that.

Dan Eisner

Prime rate increase - September 2010

September 09, 2010

Bank of Canada increases overnight rate target to 1 per cent – Not a surprise.

The Bank of Canada announced yesterday that it is raising its target for the overnight rate by one-quarter, thus changing Prime to 3.00%.

Economic activity in Canada was slightly softer in the second quarter than the Bank had expected.  Going forward, growth is expected to remain solid and business investment to rise strongly. Both are being supported by accommodative credit conditions, which have eased in recent weeks mainly owing to sharp declines in interest rates around the world.

The Bank now expects the economic recovery in Canada to be slightly more gradual than it had projected in its July Monetary forecast, largely reflecting a weaker growth picture in the U.S. Inflation in Canada has been broadly in line with the Bank's expectations and its dynamics are essentially unchanged.

The next Bank of Canada rate announcement will be on Oct 19, 2010.