As anticipated, the Bank of Canada left rates unchanged Tuesday. Due to an uncertain future for the economies in Europe, a USA trading partner who is struggling to keep its economy afloat, and an overall global recession that doesn’t seem to want to go away, it is no wonder that they are taking a “wait and see” approach.
You can expect the short term rates impacted by the Bank’s rates to remain at these levels for some time, likely into mid 2012, so anyone with a variable rate mortgage is going to experience stability for the near-term.
Even the bond market is priced so low that fixed mortgage rates are at very attractive levels. When you can get a 5-year fixed rate mortgage at 3.65% you can see why more and more people are opting for a fixed-rate mortgage. Whenever the spread between fixed and variable falls below 1.50% it makes the fixed rates seem more attractive due to their stability, hence the reason for more people choosing fixed than 2 months ago.
No matter how you slice it, rates are very attractive, and one of the reasons why housing has remained strong here in Canada.
Warm regards,
Chris
--
Christopher Bisson
President and Mortgage Broker
The Mortgage Centre
519-763-3900 x1003
www.guelphmortgagecentre.com
Tuesday, July 19, 2011
Thursday, July 7, 2011
Will the USA Default?
It’s quite amazing that the President of the USA makes a plea to government officials to raise the debt limit in order to meet its debt obligations due August 2nd and the media is focusing more on the sale of Nortel patents. In the simplest of terms, Obama is telling people that the U.S. will default on its debt obligations in less than a month unless the government there agrees to increase the amount it can borrow.
In a way it’s a good thing that this isn’t widely publicized. Imagine the panic in the markets that would ensue. Or perhaps the market is unfazed by this because it believes that the government wouldn’t possibly throw itself onto a sword; that it will increase its borrowing limit in order to keep order and money flowing in the markets.
The above is significant in our eyes because it underscores just how fragile the USA’s economic recovery really is. It is highly likely that the U.S. is years away from a full recovery, making the possibility of high inflation in the next few years unlikely. Variable Rate loan products, like Variable Rate Mortgages, should enjoy low rates for some time as a result. That isn’t to say that the Fixed Rate products are any less attractive: With 5-year fixed rate money trading hands below 4%, we’re currently near the 60-year low.
No matter how you slice it, this time in history will also be known as one of the cheapest times to borrow money. I just hope it is also known as a time when people and governments figured out a way to balance their bankbooks.
Warm regards,
Chris
--
Christopher Bisson
President and Mortgage Broker
The Mortgage Centre
519-763-3900 x1003
www.guelphmortgagecentre.com
In a way it’s a good thing that this isn’t widely publicized. Imagine the panic in the markets that would ensue. Or perhaps the market is unfazed by this because it believes that the government wouldn’t possibly throw itself onto a sword; that it will increase its borrowing limit in order to keep order and money flowing in the markets.
The above is significant in our eyes because it underscores just how fragile the USA’s economic recovery really is. It is highly likely that the U.S. is years away from a full recovery, making the possibility of high inflation in the next few years unlikely. Variable Rate loan products, like Variable Rate Mortgages, should enjoy low rates for some time as a result. That isn’t to say that the Fixed Rate products are any less attractive: With 5-year fixed rate money trading hands below 4%, we’re currently near the 60-year low.
No matter how you slice it, this time in history will also be known as one of the cheapest times to borrow money. I just hope it is also known as a time when people and governments figured out a way to balance their bankbooks.
Warm regards,
Chris
--
Christopher Bisson
President and Mortgage Broker
The Mortgage Centre
519-763-3900 x1003
www.guelphmortgagecentre.com
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