Market Commentary

THINK OUTSIDE THE BOX:  The latest round of economic data has real-estate watchers returning their focus to interest rates.

Activity in the bond market and the latest employment numbers are fueling predictions there will be a bump in fixed-rate borrowing costs in the near future.

Employment improvements are generally seen as a harbinger of inflation. That, along with other domestic and international considerations, is pushing up government bond yields, which in turn drive fixed mortgage rates.

There is also the notion that the big, trend-setting lenders will be looking to move rates up to bolster profits.

As well, Bank of Canada Governor Stephen Poloz has hinted he might be willing to let inflation run in order to avoid hiking the policy rate. That would also put upward pressure on government bond yields.

As for variable-rate mortgages, the betting is there will not be a Bank of Canada increase until the middle of 2016, holding variable rates in place for the foreseeable future.

Eden Simari    First National Financial LP   May 19, 2015

 

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