Finally, Fixed Rates Moving Down

I’ve been predicting that Fixed Mortgage Rates should be lower for a few weeks, and finally that prediction is coming true. It looks like most banks, trust companies and credit unions will be lowering their 5-year fixed rates to just under 4.00%. That’s cheap money and will make it a little more difficult for people to decide to go with a Variable Rate Mortgage as the spread between the two decreases.

The main reason for the drop is that the yield on the Government of Canada 5-year bond has been around 2.50% for 3 weeks, and lenders are finally passing the savings onto the consumer. Although the TSX has been up all week, overall it is near its low for the year, making some people take flight to the security of bonds. When this happens the yield on bonds goes down, and so should the rates on products tied to the bond yield, like mortgages.

Expect fixed rates to hover near these levels for some time, as there seems to be an equal amount of good and bad news stories about the health of the USA and Canadian economies.

Warm regards,
Chris
--
Christopher Bisson
President and Mortgage Broker
The Mortgage Centre
519-763-3900 x1003

www.guelphmortgagecentre.com

Why Haven't Fixed Mortgage Rates Come Down?

Why aren’t the banks moving rates down? It would appear to me that they are hoarding a bit of “margin” on their fixed rate mortgages in order to make up for very small margins on their variable rate mortgages. But there comes a time when Canadians should get a little vocal, and demand a better deal. Frankly, the people that lock in shouldn’t be penalized because other people are floating…the banks should price the variable products in a way that makes them profit on that side of their product line too.

To give you some perspective on this, the fixed mortgage rates are driven off the bond yields. The bond yields are down approximately 0.25% from 3 weeks ago, which gives the banks to option of lowering the fixed mortgage rates by the same amount to maintain the spread, or leave them the same and earn even more profits.

The fixed rates are quite good; however the variable rate of 2.3% that most lenders offer is attractive too. If you need help figuring out which would be right for you please pop us a note or give us a call. We’d be happy to help!

Warm regards,
Chris
--
Christopher Bisson
The Mortgage Centre
866-838-4366 x1003

www.mortgageconcierge.ca

The Results Are In!

Election Day is done. The votes are in and the Conservative Party has a majority government. Whether you vote Liberal, NDP, Green or Conservative, the one thing that will benefit all of us is the stability a majority government brings. Majority governments, by their very nature, are able to ram through whichever policies they want. They have to be cautious enough to implement good policies that resonate with the people, but they don’t have to worry about making the other parties happy.

The result of this stability usually translates into opportunities for business, for employment, and stable interest rates. That’s good news for most people thinking of buying a home, or finishing school and looking for jobs.

The current market would suggest that variable rates will remain low for some time as the USA gets its financial house in order. Count on low variable rates and stable fixed rates for the next year. Fixed rates will likely rise before the variable rates do, so if you think you might lock-in eventually, pay closure attention to the fixed rates.

With the Conservatives winning a majority expect a slight reprieve in fixed rates, with the likelihood they’ll drop by 0.15% in the next couple of weeks.

Call us if you need help refinancing or getting advice on your mortgage financing for a purchase you might be thinking about. We’d be happy to help!

Chris
--
Christopher Bisson
President and Mortgage Broker
The Mortgage Centre
519-763-3900 x1003

www.guelphmortgagecentre.com