Canadian Banks Release Interest Rate Predictions

Posted on August 30, 2010 by RateHub

Canada’s Big 5 banks recently released their interest rate forecasts. Their projections are summarized as follows.

Projections in the Overnight Rate (All number are in percentage points and are rounded to the nearest 1/4 point)

Bank	2010	2011
BMO	1.00	2.50
CIBC	1.00	2.00
RBC	1.25	2.75
Scotia	1.00	2.25
TD	1.00	2.00
Average	1.00	2.25

The 2010 forecast represents a change of +25 basis points from the current overnight rate of 0.75%, while the 2011 forecast represents a 150 basis point change from 0.75%.

5-Year Government Bond Yield Forecast

Bank	2010	2011
BMO	2.45	3.58
RBC	2.45	3.50
Scotia	2.70	3.50
TD	2.40	3.05
Average	2.50	3.41

5-year fixed rates follow 5-year government bond yields.

The 2010 forecast represents a change of +36 basis points from the current yields, while the 2011 forecast represents a +127 basis point change.

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Housing Market Cools After Strong Performance, Says CIBC CEO

Posted on August 27, 2010 by RateHub

Gerry McCaughey, chief executive of CIBC, stated that he believes the Canadian housing market and economy to be relatively strong albeit taking a brief pause. During a television interview, McCaughey discussed the Canadian housing market and its effects on CIBC’s mortgage business, expressing his optimism despite slow down in the mortgage sector.

“I think it’s healthy we see at least a slowdown here, at least a pause, for that area to catch a breath,” he told Business News Network. McCaughey also added that a cooling down period is not necessarily a bad thing, reminding that Canada’s housing market is relatively strong in comparison to the US market.

With a cooling of the housing market, Canadian home buyers can expect even further cuts to mortgage rates, as banks try to attract new customers in to the market.

To view the most accurate and up-to-date Canadian mortgage rates, visit RateHub.ca’s Best Mortgage Rates comparison page. Use our mortgage calculator to view the effects of the recent interest rate cuts on your mortgage payments.

See today`s CIBC mortgage rates.

Housing Demand and Mortgage Rates Fall, Prices Rise

Posted on August 26, 2010 by RateHub

Even as demand for housing falls, prices continue to increase. Housing sales have fallen 25% since the beginning of the year, as more houses come into the market and the competition among buyers decreases. Despite the lack of demand, housing prices were up 13.6% in June from a year ago, according to the Teranet—National Bank composite house price index. On a month-over-month basis, June prices were up 1.5% since the previous month, the largest increase since August of 2009. Part of the reason for the escalation in housing prices was due to the buying rush that occurred in advance of the implementation of HST on July 1. The average Canadian home price now sits at $342 662, a 4.9% increase from the 2009 average price of $326 689.

Experts agree that the housing market my soon experience a deceleration in price growth, if not outright price drops, thus becoming a buyer’s market. This notion is strengthened by the recent trend among major Canadian banks to lower their interest rates in order to attract new home buyers into the market. The most recent change in interest rates occurred at the end of last week, when RBC, CIBC and BMO dropped their rates by 0.1%.

To view the most accurate and up-to-date Canadian mortgage rates, visit RateHub.ca’s Best Mortgage Rates page. Use our mortgage calculator to view the effects of the recent interest rate cuts on your mortgage payments.

Compare RBC mortgage rates, CIBC mortgage rates, or BMO mortgage rates on Ratehub.ca

Major Banks Cut 5-Year Fixed Mortgage Rates by 0.1% Again

Posted on August 24, 2010 by RateHub

The Royal Bank of Canada announced a further cut to their 5-year fixed mortgage rate by 0.1%, settling at 5.39%. RBC’s reduction took effect Saturday. In a similar move, the Bank of Montreal and CIBC announced Monday that they will cut their mortgage rates, including their 5-year fixed rate, effective Tuesday. BMO and CIBC will drop the 5-year fixed rate by 0.1%, thus matching RBC at 5.39%.

See current RBC mortgage rates here.

See current BMO mortgage rates here.

See current CIBC mortgage rates here.

Mortgage Rates to Increase, as Bond Dealers Predict 0.25% Hike in Overnight Rate

Posted on August 23, 2010 by RateHub

In a recent poll by Reuters, 11 of the 12 primary Canadian bond dealers predict a 0.25% increase in the Bank of Canada’s key interest rate. The prediction pertains to the Bank of Canada’s meeting on September 8, 2010 to decide the overnight rate (the current overnight rate is 0.75%).

The rate predictions for the next three Bank of Canada meetings are as follows:

Dealer	Sept 8	Oct 19	Dec 7
BoA-Merrill Lynch	1.00%	1.00%	1.00%
BMO Capital Mkts	1.00%	1.00%	1.00%
Casgrain & Co Ltd	1.00%	1.25%	1.25%
CIBC World Mkts	1.00%	1.00%	1.00%
Deutsche Bank Sec.	1.00%	1.00%	1.25%
Desjardins Securities	1.00%	1.25%	1.50%
Laurentian Bank Sec.	1.00%	1.00%	1.00%
National Bank	1.00%	1.25%	1.50%
RBC Capital Mkts	1.00%	1.00%	1.25%
Scotia Capital	1.00%	1.00%	1.00%
TD Bank	1.00%	1.00%	1.25%
Mean Average	1.00%	1.07%	1.08%

While the interest rate hike is merely a prediction, consumers should brace themselves for increases in mortgage rates.

Consumer Prices Rise 1.8% in July; Effects on Home Buyers

Posted on August 20, 2010 by RateHub

Statistics Canada released a report Friday August 20, declaring that consumer prices have risen 1.8% in the 12 months to July. Energy prices rose 7.9% between July 2009 and July 2010. Within the energy index, electricity prices increased by 9.8% in July 2010 compared to the same month last year. As well, gasoline prices increased by 4.8% in July 2010 compared to July 2009.

A component of the Consumer Price Index, the mortgage interest cost index, which measures the change in interest payments on outstanding mortgage debt, decreased in July by 4.2%, following a decrease in June of 5.0%. What does this mean for home buyers? It means lower monthly payments on their mortgage. Interest rates have been steadily decreasing since 2007, represented by the recent moves major Canadian banks have made to cut interest rates. This trend will continue as long as banks are trying to attract new buyers into the slowing Canadian housing market.

Consumer Price changes by province:

Ontario experienced the largest increase in consumer prices with a 2.9% rise in the 12-month period to July. Prices for gasoline, electricity, and passenger vehicle insurance premiums went up. Ontario consumers also paid more for homeowner`s replacement costs.

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Canadian Home Sales Slump 30% From Last Year

Posted on August 19, 2010 by RateHub

The Canadian Real Estate Association released a report Monday stating that the housing market has experienced a 30% decline in sales compared to the same month last year. Despite the slump, average July housing prices have increased slightly by 1% compared to July 2009. The average housing price as of July is $330 351, compared to$342 662 in June, representing a decrease of approximately 3.6%.

The increase in housing prices in June can be attributed to a house-buying rush, as consumers tried to avoid the July 1^st implementation of the Harmonized Sales Tax (HST). However, HST only applies to services used when buying and selling an existing home. Thus, any minor effects HST may have had on mortgage payments were outmatched by the price increase.

However, hope for the housing market rests in the recent cuts to interest rates by major Canadian banks. For example, TD, Scotiabank, Laurentian Bank, the National Bank of Canada, BMO, CIBC, RBC cut their closed 5 year fixed mortgage rate by 0.1%, resting at 5.49%.

To view the most accurate and up-to-date Canadian mortgage rates, visit RateHub.ca’s Best Mortgage Rates Comparison page. Use our mortgage calculator to view the effects of the recent interest rate cuts on your mortgage payments.

Major Canadian Banks Cut Mortgage Rates by 0.1%

Posted on August 18, 2010 by RateHub

Five of Canada’s major banks cut their posted mortgage rates by one tenth of a percentage point, effective August 17, 2010. For example, the five-year closed mortgage rate fell by 0.1% to 5.49%.The banks involved in the rate cut are the Royal Bank of Canada, Bank of Montreal, Scotiabank, CIBC, and Laurentian Bank.

The rate cut followed a report by the Canadian Real Estate Association, which stated a 6.8% decrease in housing sales in July. RBC was the first to announce a reduction in their rates, with the other four banks quickly following suit.

Annual Housing Starts Rate Decreases in July

Posted on August 12, 2010 by RateHub

The number of Canadian housing starts has suffered another drop in July, while the average cost of housing has been steadily increasing. However, expectations were exceeded in housing resale market in Canada, as the construction of new homes declined slower than originally estimated, creating more opportunities to invest. The CMHC found that 189 200 new homes were constructed during July, which although represents a 1.6% decrease, is well above the expected 185 000 new starts.

Click here to see mortgage rates Canada.

New House Prices Rise 0.1% in June

Posted on August 11, 2010 by RateHub

Statistics Canada released a report Tuesday, August 10 stating that house prices experienced a slight increase of 0.1% in June. The largest gains were recorded in Saint John, Fredericton and Moncton, New Brunswick, where housing prices were up 1.3%. The increase is attributed to an increase in material and labour costs and land development costs. Despite the overall increase, 21 metropolitan areas recorded a decrease in housing prices. For example, Charlottetown and Regina experienced decreases of 0.3% and 0.4% respectively.

Accompanying the house price increase, the CMHC reported that total housing starts decreased to 189 200 in July, a 1.6% decrease from June.

See current New Brunswick mortgage rates.

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Monthly Archives: August 2010