Mortgage Interest Rates Commentary

Here’s a little commentary on interest rates I found that provides some insight into why I believe we will not see any dramatic increase in mortgage interest rates –in contrast to some of the stories I’m sure many of you have been hearing. It looks like we have good news for Variable Rate Mortgage holders, and those looking to get into the market:

“The annual inflation rate rose a less-than-expected 1.3 per cent in December, said Statistics Canada, and core inflation stayed at 1.5 per cent - a half a percentage point below the Bank of Canada's target rate.

In addition, consumer prices dropped last month.

"The way markets look at it is that because inflation remains subdued, it puts even less pressure on the Bank of Canada to raise interest rates and that softens the currency," Bank of Montreal chief economist Douglas Porter told The Canadian Press

. He added that business can't raise prices due to the weakness of the economy and the strength of the Canadian dollar has quashed import prices.
Bank of Canada governor Mark Carney will release the bank's next Monetary Policy Report Thursday.”

--source: mortgagebrokernews.ca

One thing to keep in mind about interest rates is the key difference between fixed and variable rates. Variable rate mortgages are set against the Bank of Canada’s Prime Lending Rate and are therefore directly connected to the Canadian Government’s monetary policy(ie. High inflation = increase interest rates). Therefore, you can expect to see variable rate mortgage holders remain happy with their mortgages for the foreseeable future. In contrast, fixed rate mortgages are priced based on the Canadian Mortgage Bond Market –meaning they are often subject to investor speculation and media reporting. This relationship is the reason why 2009 saw rapid increases and decreases throughout the year in fixed mortgage interest rates. I would expect we’ll see the same type of ups and downs for at least the first 2 quarters of 2010, but in my estimation the average rate should remain fairly stable.

What will we see this year? I expect to see interest rates rise slightly(0.25-0.50%) over the course of the year, but I will keep you all posted throughout. Let me know if you have any questions. For more information regarding mortgage interest rates, or to get your rate held call one of the qualified mortgage professionals at Alberta Mortgage at 780-479-2222 or Apply Online @ http://www.albertamortgagecentre.com today.



Regards,

Anuj Gupta, AMP, BComm

Mortgage Associate

Alberta Mortgage

780-479-2222 ext 14

www.albertamortgagecentre.com





When Results Matter

Fixed Rates Set to Rise

After an up and down 2009, it looks like 2010 will be starting off with rising interest rates. With the economy appearing to have begun recovering, fixed mortgage interest rates are now expected to move upwards in an attempt to combat rising inflation. As interest rates rise and property values increase, it may become increasingly difficult for prospective home buyers to qualify for mortgage financing. It may be a good idea at this time to contact a qualified mortgage professional now and secure a mortgage rate if you are looking a purchasing a home sometime in the first quarter of 2010.

For more information about interest rates, and to secure a rate hold call one of the qualifed Mortgage Associates at Alberta Mortgage @ 780-479-2222 or visit http://www.albertamortgagecentre.com.