Where are rates heading?
In recent weeks the bond markets have performed very well as
investors stayed away from the stock market This created a fairly large spread
between the lending rates and the cost of money so we saw lenders lower their
rates over the last 2 weeks. Investors have returned to the markets after
stronger economic data and this has caused these spreads to shrink somewhat.
While we see some lenders having a rate sale we do not see an overall trend
towards lower rates as a whole.
Next week the Bank of Canada is expected to increase the overnight rate by .25%
based on the current data coming out of Canada. This will also offer the Bank
of Canada to be able to reduce rates if the recovery does not continue - expect
the new prime to be 2.75% by next week.
Some lenders have started to offer variable rates as low as prime less .7% however, this mortgage does not allow any prepayment, confirming that low rates are not always the best plan of action.