5:56 p.m. Update Payment Worries: 1 in 3 Canadians fear they’ll miss a rent or mortgage payment (Survey.) If you’re one of them, here’s an updated list of lender links for payment deferral info. Appraisal Stop-gap: More lenders are announcing that they will accept “Modified Full Appraisals.” That’s where appraisers do virtual inspections of the property with the homeowner’s help,...
Prior to the last few days, consumers had expected falling Bank of Canada rates and lower bond yields to translate into cheaper mortgage rates. And they have, big-time. But these two benchmarks aren’t the only things that determine mortgage pricing. Borrowers were reminded this weekend that liquidity and credit risk are also in the equation. Ten days ago we noted...
A lot of folks out there were skeptical that the big banks would show borrowers love and pass along the full Bank of Canada rate cut.Us included. But banks showed they still have a heart and did us right. RBC led the charge by slashing its prime rate 50 basis points to 3.45%. The rest of the bank herd then...
Consider the state of our world: The yield curve is inverted (usually recessionary) Unemployment may be close to a cycle bottom (often recessionary) Oil prices are plunging (disinflationary) Consumers have too much debt and not enough savings(usually disinflationary) The market is desperate for yield (bullish for bonds / bearish for rates) Inflation is well-anchored (eliminating the need for rate hikes)...
Canada’s rate-setter left its key rate untouched today while striking a less-than-cheery chord on the country’s outlook. Here’s a quick take on this morning’s Bank of Canada rate decision: Rate Announcement:No change Overnight rate: Remains at1.75% Prime Rate: Remains at 3.95% (seePrime Rate) Market Rate Forecast:One rate cut in 2020 BoC’s Headline Quote: “…Governing Council will be watching closely to...
Canada just witnessed its worst spike in unemployment since the Great Recession of 2009. An estimated 71,200 jobs were lost in November. And we all know what happens when unemployment bottoms and starts climbing. Rates usually drop. Is This Really the Bottom in Unemployment? No one knows what tomorrow will bring (until tomorrow).But here’s what we know: Economic cycles have...
The Bank of Canada ended 2019 where it ended 2018, with prime rate frozen at 3.95%. Here’s a summary of the Bank of Canada rate decision this morning: Rate Announcement:No change Overnight rate: Remains at1.75% Prime Rate: Remains at 3.95% (seePrime Rate) Market Rate Forecast:One rate cut in 2020 BoC’s Headline Quote: “Future interest rate decisions will be guided by…the...
People are constantly hoping to time the rate market, despite how ineffective it may be. For the brave souls who try, here’s some interestingresearch from the U.S. Federal Reserve. One of its economists,Claudia Sahm, has documented a pattern in unemployment data. In her Fed report, she writes, “…Comparing the three-month average [U.S.] unemployment rate to its low over the prior...
As much as academics advise against it, people (consciously or subconsciously) try to predict interest rates before choosing a mortgage. But, interestingly, they don’t look very far into the future when making these forecasts. “…Households are forward-looking over relatively short periods of time,” research shows. A 2015 international study byCristian Badarinza, John Y. Campbell and Tarun Ramadorai found that “the...
In a normal universe, people who lock in a floating-rate mortgage lock into a fixed rate. And that fixed rate is almost always higher than their current variable rate. But this is not a normal universe. In the world we now live in, variable borrowers are actually locking into five-year fixed rates that are lower than their current rate. For...
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