Fixed Mortgage Rates Drop in August
RateSupermarket.ca's panel of financial experts expect lower short term
fixed mortgage rates
TORONTO, Aug. 5 /CNW/ - RateSupermarket.ca, Canada's rate comparison website
for personal finance products such as mortgages, insurance, credit cards and
GICs has announced the results of their Mortgage Rate Outlook Panel for
August 2010.
Canadians should expect lower fixed mortgage rates as lenders respond to
dropping bond yields, while variable mortgage rates should increase
following the Bank of Canada's rate announcement at the beginning of
September.
Fixed mortgage rates: Down
The majority of our panel members believe fixed mortgage rates will decrease
in August, and during the first few days of the month we have already seen
this happening. As mortgage lenders react to lower bond yields, their
continued strong demand for residential mortgages is increasing competition
for mortgage customers.
Dr. Ian Lee, Director of MBA Program at Carleton University summarizes this
scenario well: "There is an excess of mortgage funds and lenders chasing a
decreasing number of mortgage borrowers." This increased competition is
likely to be good news for mortgage shoppers resulting in price cutting and
lower fixed mortgage rates.
Variable mortgage rates: Up
Expect variable mortgage rates to remain level in August, but to increase at
the beginning of September following the next Bank of Canada rate
announcement. The Central Bank's most recent Monetary Policy Report
indicates that an increase in the Bank's trend-setting overnight lending
rate in September is likely.
Despite the weak US job numbers and soaring unemployment in most of Europe,
the Bank predicts a gradual reduction in monetary stimulus in Canada. With
only three Bank of Canada meetings remaining till the end of the year, it is
likely that the September announcement will push interest rates up.
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