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Don’ t lock in your rate.

The Variable rate mortgage is tied to prime and can still be had for as little as 2.55% whereas the five year fixed rate is at 3.59%

what is the risk?  The Bank of Canada’s key lending rate, which prime is tied to, hasn’t moved in three years and some economists maintain it won’t be moving until 2015.

The economic forecast for the remainder of 2011 and 2012 is being chopped, together with a delay of anticipated faster growth into the end of 2013.  “At the very least, they imply that the central bank has the flexibility to leave rates on hold all the way through next year and even into 2013, if necessary”.

This is causing the bond prices to increase, which causes yields to decrease.  Last I looked, 5 year Gov’t bond yields are down by 10 bps today on this news which pretty much wipes out the increases from last week.  So there’s little pressure on fixed rates to increase now, based on the current bond yields. This is good news for those looking for a 5 year fixed rate mortgage in the near future!

For more information about how I can help visit my website at: www.darick.ca

Thanks for Reading,

Darick Battaglia

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