27 May

Bank of Canada Maintains Rate

General

Posted by: Cory Kline

As was widely expected, the Bank of Canada left overnight rates unchanged at 0.75 percent and reiterated earlier comments about the likely trajectory of the Canadian economy. The Bank is more optimistic about the economy than private sector forecasters, believing that a rebounding U.S. and global economy will spur Canadian business investment and exports in coming months.

The problem is that business investment growth has declined sharply in the wake of the oil price rout and ensuing collapse in business investment in the oil patch–a situation that is not likely to improve anytime soon.

In addition, a marked further improvement in Canadian net exports likely awaits a further decline in the Canadian dollar, which has strengthened a bit recently with the uptick in oil prices. Although the Bank of Canada would never admit it publicly, they would welcome some slippage in the loonie to help boost trade. 

The Bank continues to aver that “the underlying trend of inflation is 1.6 to 1.8 per cent, consistent with persistent slack in the economy”. They will certainly continue with the current level of monetary accommodation until the economy moves closer to fully employment and inflation moves back to the midpoint of the 1-to-3 percent target band, which is not likely until next year. 

The Federal Reserve, on the other hand, will like raise rates in September. Nevertheless , the Bank will remain on the sidelines as the Fed rate move will no doubt be anticipated and put downward pressure on the Canadian dollar. 

Ironically, the Bank has no direct control over longer-term interest rates, which have risen significantly in the past month or so. Five-year government bond yields, which are closely linked to domestic mortgage rates, are determined by global market forces. These yields have risen in the U.S., Canada and elsewhere from a considerably overbought position, steepening the yield curve. Thus, the Bank will get no help from credit-sensitive spending to meet its forecast for stronger growth for the rest of this year.  

 

Dr. Sherry Cooper
Chief Economist, Dominion Lending Centres
19 May

Residential Mortgage Market Update

General

Posted by: Cory Kline

 Market Commentary

The latest round of economic data has real-estate watchers returning their focus to interest rates.

Activity in the bond market and the latest employment numbers are fueling predictions there will be a bump in fixed-rate borrowing costs in the near future.

Employment improvements are generally seen as a harbinger of inflation. That, along with other domestic and international considerations, is pushing up government bond yields, which in turn drive fixed mortgage rates.

There is also the notion that the big, trend-setting lenders will be looking to move rates up to bolster profits.

As well, Bank of Canada Governor Stephen Poloz has hinted he might be willing to let inflation run in order to avoid hiking the policy rate. That would also put upward pressure on government bond yields.

As for variable-rate mortgages, the betting is there will not be a Bank of Canada increase until the middle of 2016, holding variable rates in place for the foreseeable future.

Thank you First National for your Insight.

8 May

A bond market implosion this big has only happened twice in the past 15 years!

General

Posted by: Cory Kline

Julie Verhage, Bloomberg News | May 7, 2015

The last couple of weeks have proven to be quite interesting for bond markets around the world.

Major government debt markets including Germany, the U.S. and the U.K. have seen a dramatic sell-off, sparking stark jumps in bond yields.

Read more

In the past week, bonds have continued to race higher. Two lenders have already commented on possible rate adjustments. The article below provides more details.

So far, there haven’t been any changes to interest rates since last week.

Variable rates are in the low 2% range.

The next meeting with the Bank of Canada is on May 27, 2015

P.S. If you, your family, or co-workers require guidance on current market trends, please call me, I am always available to help.

 

Cory Kline, AMP 
Neighbourhood Dominion Lending Centres – Barrie Office 
 
Cell / Text: 705-794-1283
Fax: 1-877-812-6190
 
Mortgage Agent, FSCO # M09001239
Brokerage FSCO Lic. # 11764 

 APPLY ONLINE -> www.MortgageAndLifestyle.com/how-to-apply-mortgage

 

4 May

Mortgage Market Update

General

Posted by: Cory Kline

Rates remain unchanged again this week. Over the past few weeks, bonds have continued an upward trend. At this time, it is too early to tell if this will continue.

5 year monies are in the mid to upper 2% range.

The next meeting with the Bank of Canada is on May 27, 2015

If you, your family, or co-workers require guidance on current market trends, please call me, I am always available to help.

Cory Kline, AMP

 

Neighbourhood Dominion Lending Centres – Barrie Office

 

Cell / Text: 705-794-1283

 

Fax: 1-877-812-6190

 

 

Mortgage Agent, FSCO # M09001239Brokerage FSCO Lic. # 11764