Here is an article from Canadian Mortgage Trends that quotes Bank of Canada’s Mark Carney stating that the BoC overnight rate will remain low until 2010.
With fixed rates moving up (but still at fantastic rates), it may make sense to offer an ARM rate today. The Merix ARM is at Prime + 0.40%, which equals 2.65% today. This is a great option for lots of clients. If your client is still sitting on the fence, remember that the Merix 50/50 Wise mortgage allows ½ in an ARM and ½ in Fixed, and it goes up to 95% LTV. Great options. And maybe Carney doesn’t exactly say the Merix ARM is a great choice, but all the evidence leads us to that conclusion!
June 11, 2009
Carney Repeats: Rates Low Till June 2010
Bank of Canada chief, Mark Carney, repeated his pledge to keep rates low, saying today:
“Conditional on the outlook for inflation, the Bank expects the policy rate to remain at its current level until the end of the second quarter of 2010…”
That “inflation” caveat means there is a chance rates will rise beforehand, but few are brave enough to predict it. Nonetheless, Carney stressed that things can change.
Carney also said people shouldn’t get overly excited about an economic recovery just yet. He noted lots of uncertainty on the horizon, including the Canadian dollar. It’s virtually unprecedented 2-month rise (see chart) is offsetting much of the government’s economic stimulus.
In conjunction with this news, Canada’s 5-year bond yield promptly bounced off of technical resistance and closed near the day’s lows, at 2.75%. It will be interesting to see if it can get through the 3% level. Perhaps we’ll have a respite from rising mortgage rates for a little while. Or perhaps we’re wishful thinkers.
