The Canadian Economy shrank in February for the first time in five months as the manufacturing sector suffered its biggest contraction since the worst stretch of the recession and the wholesale trade also declined. The February numbers cast doubt on the notion that the Bank of Canada will start raising interest rates again before the summer even as it watches for signs of inflation.
TD bank announced today that it will be raising fixed term mortgages on Tuesday April 5th. Rates are expected to increase by .35% with the 5 year posted rate (used for qualifying 1 to 4 year fixed and variable mortgages) increasing to 5.69%. So far no other lender has announced a rate increase however a lender never increases rates alone so expect all lenders to follow suit.
The next Bank of Canada meeting is in May. The market is not expecting a rate increase. After that the next meeting will be in July.
With the Canadian dollar riding high against the US dollar this will put pressure on Bank of Canada/Government to keep interest rates low.
Canada’s annual inflation rate fell slightly in February, giving the Bank of Canada room to keep interest rates low over the next few months, economists say.
Statistics Canada said Friday its consumer price index edged down one-tenth of a point to 2.2 per cent in February, with rising energy and gas prices keeping inflation just above the Bank of Canada’s ideal two per cent target.
Mortgage fixed rates edged lower yesterday with the averaging 5 year fixed dropping from 4.04% to 3.94%. With the variable mortgage holding steady at 2.30%, this is good news for home buyers entering the Spring real estate market.
Report form CMHC
Housing starts will be in the range of 157,300 to 192,900 units in 2011, with a point forecast of 177,600 units. In 2012, housing starts will be in the range of 154,600 to 211,200 units, with a point forecast of 183,800 units.
The Bank Of Canada wanted to know what helps consumers get the best mortgage interest rate so they did a study among the top 10 mortgage lenders, below are some of the results
Mortgage lenders increased fixed mortgage rates by roughly .20% this week. This was expected with the Bond yields moving up last week. Over the past year fixed mortgage rates have fluctuated up and down by roughly .80% from 3.79% to 4.59% but overall remained flat i.e. the trend has not changed. The question that everyone is asking now, is the trend finally breaking into a upward trend in both fixed and the variable lending rate. This remains to be seen. Just as we think the trend is breaking and moving up we get a bad piece of economic news which corrects the trend.