. One truth in economics is that mortgage rates typically follow inflation expectations, at least over time. That eventually poses a problem for borrowers, particularly after consumer prices take flight, like they have this year. U.S. core inflation, for example, recently jumped the most in four decades, 0.9% on a monthly basis. That “was well above what I and outside...
The Mortgage Report: Mar. 17 Fed boss Jerome Powell pledged Wednesday that he would not hike U.S. interest rates “preemptively based on forecasts.” In saying that, the Fed once again left U.S. rates unchanged. But more importantly, it left its general rate outlook unchanged, meaning a consensus of its members still project no Fed rate increases through 2023. If history...
Despite record-low short-term interest rates, most banks are offering junk 1-, 2- and 3-year rates on uninsured mortgages through the broker channel. We’re seeing 5-year variable pricing as low as 1.45% or less at major banks. Yet, on a one-year fixed, for example, they quote mortgage brokers over 2.40%. That’s well above the discretionary rates bank customers are reporting to...
—The Mortgage Report: Aug. 27— Closer to Free Money Never on record has a fixed-mortgage contract rate undershot 1.40% in Canada, until Thursday. This one-year fixed offer launched exclusively on RateSpy.com and it’s one more sign of the times. A sign that markets expect no significant boost in rates for as far as the eye can see. Just 18 months...
The Mortgage Report – June 10 Dot Dot Dot Plot: The U.S. Federal Reserve, which sways Canadian rates more than many realize, was more pessimistic than expected in its rate announcement today. It’s “Dot Plot” (the Fed’s official rate forecast) now projects no rate hikes for 2020, 2021 and likely 2022. It’s unlikely Canada deviates much from the Fed’s path...
The world’s most powerful central bank has slashed its main interest rate by one whole percentage point. This is the U.S. Federal Reserve’s largest emergency cut in its100+ year history. The move is a desperate bid to keep money markets functioning and stimulate borrowing and economic activity.Malls, restaurants, bars, factories, sports seasons, schools, international borders and even Vegas casinos are...
The rate market just witnessed a rarity. The U.S. Federal Reserve has suddenly slashed its key interest rate by 50 bps. The last such “emergency rate cut” happened in 2008 during one of the worst recessions of all time. This pretty much cements a Bank of Canada rate cut by tomorrow. “With markets now pricing in a full 25 bps...
The U.S. Federal Reserve and Bank of Canada seldom make rate announcements on the same day, but tomorrow will be an interesting exception. No one expects any fireworks, but if you believe market expectations, the Fed will cut its key rate 1/4 point while the BoC does a whole lot of nothing. If it all plays out accordingly, it’ll be...
Canadian mortgage rates follow U.S. rates like spring follows winter. So today’s U.S. Federal Reserve rate cut is most relevant indeed. The Fed chopped the floor for its key target rate by 25 bps today to 1.75%—the same as the Bank of Canada. It’s the second cut in 49 days, but only the second cut since 2008. As usual, the...
Canadian mortgage rates take their cues from many things, and U.S. monetary policy is near the top of the list. That’s why today’s Fed rate cut—the first since the financial crisis—is meaningful to borrowers. Fed decisions always move Canadian rates in some respect but in this case, key questions remain. Here are the two biggest ones. How Many Cuts Are...
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