Weekly Mortgage Update – July 21, 2014 - Lynn McLellan, Verico Dreyer Group *2 year fixed @ 2.34% *3 year fixed @ 2.49% *4 year fixed @ 2.77% **5 year fixed @ 2.94% *Variable Rate Mortgage @ prime -.60% *OAC, Rates Subject to Change without Notice **insured mortgages only · The return to full capacity in the Canadian economy has been forecast by the Bank of Canada, for the last two years, to be about two years down the road. Last week’s rate announcement and related commentary from Governor Stephen Poloz projected that it will now be mid-2016 until we see a full recovery. Variable and Prime Rate based mortgage holders can relax once again as an increase in the Bank’s key overnight rate now looks to be well down the road. The rate was left at 1%, where it has been since September, 2010. Canada’s inflation rate has jumped to and now above 2% more quickly than was expected in recent months but any suggestion that the Bank of Canada might introduce a tightening bias as a result was quashed last week as the jump in inflation was attributed by the Bank to the “temporary effects of higher energy prices, exchange rate pass-throughs and sector specific shocks”. There was been no significant change in economic fundamentals which is likely to drive inflation permanently above 2% over the next two years. The Bank’s commentary came two days before Statistics Canada released June’s headline inflation figure which came in at 2.4%. Core inflation, which excludes certain volatile items, was 1.8% in June. The global economic recovery is developing more slowly than was expected by the Bank in its last commentary and it referred to the “serial disappointment” that this has caused. The Bank attributed the delay in the recovery to “private sector deleveraging, fiscal consolidation and uncertainty”. The recovery and return to full capacity is coming to the Canadian economy as a low currency and growing global demand will, eventually, drive a return to the long-awaited growth in exports and business investment. As for the real estate sector and consumer debt loads, the Bank continues to see that household imbalances are evolving constructively and that “recent data are broadly consistent with a soft landing in Canada’s housing market”. Real GDP is forecast to be about 2.25% for the next two years and for the time being then, the current highly stimulative monetary policy is still needed to close the output gap. The Bank is taking a neutral stance on the future timing and direction of any change in policy and will simply wait for new data indicating that conditions have changed before it moves off its neutral stance. Prime based mortgage borrowers (present and future) can rest easily for the rest of the summer at least. Lynn McLellan BA Dreyer Group Mortgages Inc- A Member of the Verico Broker Network #308-15252 32nd Ave, Surrey, BC V3S 0R7 Phone: 604 536 8400 Cell/Text: 604 518 2383 Fax: 604 535 9413 mortgageweb.ca/Lynn
Posted on: Mon, 21 Jul 2014 21:44:57 +0000
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