Experts agree mortgage rates will rise over the course of the next month, despite RBC cutting its rates by 10 basis points over the weekend.
“Five-to-10-year bond yields continue to creep up and with the announcement of (quantitative easing) tapering in the U.S., it should mean there is very little chance for fixed mortgage rates five years and over to go down anytime soon,” Ron Butler of Verico Butler Mortgage said as part of RateSupermarket.ca’s latest expert panel. “They will likely remain steady or experience a slight shift upward for fixed rates in (the) next 30 days.”
The panel -- which includes Butler, Dan Eisner of True North Mortgage, Dr. Ian Lee of Carleton University and Kelvin Magaroo of RateSupermarket.ca – almost unanimously agree that rates will rise. Other analysts are suggesting they’re not sure how the Central Bank will move Wednesday; whether it will decide to keep its overnight rate at its current 1 per cent for finally increase it.
Still, on the question of fixed rates Lee, unlike his other panelists, is not sure rates will increase.
“The movements of the five-year bond rate are so imperceptible, reflecting no real change in the underlying economic conditions, coupled with lower home-purchase demands in January and February,” Lee, the director of Carleton’s MBA program, mused. “What person goes house hunting in -30 C with intermittent power and awful road conditions? This suggests the fixed rate will remain unchanged until the spring, barring any surprise announcements from the finance minister.”
And when it comes to Flaherty, Lee believes he may finally be backing away from his former willingness to interfere with the housing market.
“Flaherty's most recent musings on interest rates suggest he is punting the issue to BoC Governor Poloz,” Lee said. “It seems Flaherty is saying in effect, ‘I have done all the heavy lifting for the past three years to slow down the realty sector. Now it is your turn to step up to the plate and start to raise interest rates to further reduce demand for housing.’"
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