Interest rates are still dropping. All though we thought they couldn't continue...it doesn't seem to be the case. Tami O'Callaghan an accredited mortgage professional just sent us an update on how interest rates are doing.
See below for more information.
Cheers,
Katie
May 25, 2012
Rates are Falling. Keep it on the Down-Low
Over the last two months, there’s been an eerie sentiment shift in the rate market.
In March, the BoC's hints of tightening drove yields to 7-month highs. Financial markets almost guaranteed rate hikes by December.
Now, a tsunami of fear out of Europe has pushed borrowing costs to unsettling levels. The most glaring example is Canada’s 10-year yield, which made an all-time low today. What's more, OIS traders have now completely priced out any chance of BoC hikes in the next 12 months.
The upshot: Lower yields mean lower fixed-rate funding costs. As a result, we’re starting to see alluring rate cuts. Just don’t count on the flashy national mortgage wars we saw in March.
With DOF Minister Jim Flaherty discouraging rate sales, banks are now more cautious about their promotions.
In fact, almost every bank cutting rates this week refrained from publicly advertising cheaper discounted rates. Their press releases announced only posted rate drops, which is unusual on such a wide scale.
The only exception was BMO, which had the conviction to advertise a lower 5-year discounted rate at 3.39%.
With or without hoopla, rates are dropping industry-wide. In the broker channel, Scotiabank published its lowest 5-year rate ever at 3.19%. In the retail channel, we’re hearing bank specialists quote comparable rates on a “discretionary” basis.
Hence, despite Flaherty’s apparent efforts to slow mortgage discounting, it looks like we’re headed right back to near-3%-land on 5-year money. The rate market is no one's puppet.
Tami O'Callaghan
Accredited Mortgage Professional
Verico Complete Tami O’Callaghan Mortgages Inc.
Cell: (250) 809-8099
Fax: (250) 492-0425
email: tocallaghan@shaw.ca
