An influential international body is urging Canada’s central bank to raise interest rates in the fall, and continue doing so through 2013 to cool housing prices and contain inflation.
The Paris-based Organization for Economic Co-operation and Development’s prescription for monetary policy will stoke the already hot debate about whether the Bank of Canada’s interest rate stance is inflating a housing bubble.
Governor Mark Carney and other officials say the days of ultra-cheap money are coming to an end, although they so far have declined to be more specific. The OECD, a high-powered economic research group backed by contributions from its 34 rich country members, offers a scenario: An increase in the benchmark rate of a quarter of a percentage point in the autumn, and similar increases each quarter through to the end of next year, leaving the benchmark overnight target at 2.25%.
That still would be low by historical standards, yet, according to the OECD, likely a big enough increase to cause prospective homeowners to think twice before buying at current inflated prices. But the OECD’s recommendation comes with a risk.

Click here for more in the Globe and Mail.

Today’s Mortgage Rates… 3 year fixed: 2.94% 5 year fixed: 3.19% 10 year fixed: 3.89% Free Down Payment: 4.73% Variable: 2.85%

Cory Kline (Mortgage Advisor from Neighbourhood Dominion Lending Centres)

705-794-1283 or Cory@ndlc.ca

Canada’s mortgage brokers are warning the banking regulator that its proposed mortgage underwriting rules could result in people losing their homes. 

With instability of the current European elections, we have seen the bond rate drop slightly. With so much European uncertainty there is potential to see the bond rate stay in this lower range.
The low bond rate creates our low interest market.  
Keep in mind we still have 2 lenders offering 10 year funds at 3.89%. A wonderful option for those concerned with future rates

If you have a variable rate of any more than prime +.75 or a fixed rate of 4.0% 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.

• With the Bank of Canada recently signalling that interest rates may rise sooner than many were anticipating, the question becomes how well-prepared Canadians are for higher rates?

• Over the medium-term, interest rates will likely rise at least 2 percentage points and there is no doubt that a significant minority of Canadian households will be at-risk when this occurs.

• There have been some preliminary signs that Canadians have begun to hunker down and/or protect themselves from interest rate increases. Household consumer credit growth has slowed to a substantial degree.

• Interest rates are set to rise at a gradual pace and the ability of consumers to fix into low interest rates now imply that the impact of higher rates may be felt over a number of years.

• These developments give credence to our expectation that the imbalances in the housing market and in the household debt-to-income ratio will unwind over time rather than in a precipitous fashion. At the same time, however, medium-term prospects for consumer spending remain limited.

If you have any questions as to what this means to your current mortgage plan, we are always here to help you with unbiased advice.

Contact Cory Kline at 705-794-1283 or cory@ndlc.ca

Mortgage Advisor at Neighbourhood Dominion Lending Centres