The bond rate decreased slightly over the last week but newly released inflation numbers suggest rising rates are on the horizon.

Interesting article below providing an overview of the inflation we have seen…

Price Hikes Spreading as Inflation Hits 3.3%

TAVIA GRANT AND RICHARD BLACKWELL from the Globe and Mail; Tuesday, Apr. 19, 2011 7:07AM
Inflation is spreading through the economy at a faster pace than the Bank of Canada expected, marking a turning point after two years of little price pressure.

Until now, higher prices had largely been limited to energy, defying a trend that has swept through other countries as commodity prices surge. But they’re now showing up throughout the economy, from the post office to department stores, promising to influence key business decisions and threatening to drive up rents.

Bank prime is at 3.00%
The next meeting of the Bank of Canada is on May 31, 2011  

If you have a variable rate of any more than prime,  prime + or a fixed rate of 5.0% or more, we should explore the merits of refinancing to a lower rate. Contact us for a free, no obligation review. Spending a few minutes could save you thousands of dollars.

Have a Happy Easter long weekend!

-Cory Kline

United States 

•   It was a very quiet week for U.S. data releases, but there was plenty to digest on the macro economic policy front, both domestically and abroad.   

•   Unsuccessful discussions regarding the U.S. budget, a growing divide at the Fed, and the first interest rate hike since 2008 by the European Central Bank (ECB), led to higher U.S. Treasury yields across the maturity curve and to a further weakening of the U.S. dollar vis-à-vis its main crosses.  

•   The ECB move was a reminder that interest rates are headed in only one direction and it won’t be long before other central banks in advanced economies such as Canada and the U.K. follow suit.  

Canada 

•   The Bank of Canada’s Business Outlook Survey indicated that the inflation expectations of businesses have turned upwards, while more firms appear to be facing increased capacity pressures.  Our view on inflation and the direction on monetary policy remains unchanged.  The increase in inflation expectations is largely linked to rising energy prices.  

•   Firms indicated that competitive pressures will limit their ability to pass cost increases onto consumer prices.  

•   A number of domestic demand indicators suggest inflation will not be a problem in the near-term.  Nonetheless, slack in the Canadian economy is gradually being absorbed and a rebalancing of monetary policy will be needed, but the Bank of Canada can wait until July to start raising rates.

A Mortgage rate hike has happened over the last few days. Fixed rates moved up by 20-30 basis points. We still have a few lenders who have not moved yet, but fully expect to lose them any day now. 5 year fixed mortgages are now in the 4.2-4.3% range. There were no changes in the pricing on variable rate mortgages. This has increased the spread to approximately 2% (almost double) between the 2 products.

At this time there is no change expected in the Bank of Canada rate until after our Federal election.

If you have a variable rate of any more than prime,  prime + or a fixed rate of 5.0% or more, we should explore the merits of refinancing to a lower rate. Contact us for a free, no obligation review. Spending a few minutes could save you thousands of dollars.

These low rates are still close to historical lows, making now a great time to buy or refinance.