roller coaster ride

The stock markets are up and down - but the interest rates are softening as expected. Canadian mortgage lenders are dropping the interest rates on 5 year money back to 5.09% from previous highs of 5.24% as expected. Will the rates continue to fall ? Time will tell - there is still room for further cuts - it will be interesting to see if a lender tries to bring the 5 year rate below %5 which would be a psychological boost to the market place...the spring market will tell - stay tuned
greygoose ....out

deep freeze coming back

well the cold weather hasnt' disappeared yet - it looks like another cold snap on the way for this week - that along with a chill in the market brings to mind the saying - we live in interesting times. stay calm - do not panic - watch the interest rates for signs of a drop - if you have a mortgage coming due in the next 120 days (4 months) - call us at 613-563-5083 or 613-563-5080 - we can protect a rate and if the rates drop you will get the lower rates - its a win win proposition....stay warm and calm....now back to my greygoose....

march 4th - awaiting the new week

last week we saw the 5 year government bonds drop below 4% - and RRSP season is over - we also saw the stock market correct which could lead to stronger bond yields - but I dont think so..I still believe rates will drop back to the 5% range for 5 year terms.
but dont forget - the government and lenders have come out with 40 year amortizations, 100% financing at discounted interest rates - we are seeing the market slow and prices are stable but not rising - therefore we could be headed towards a US recession or dramatic slowdown which will spill over to Canada.
If you are on a floating interest rate - keep your eyes on the bank of canada announcements and on the discounted fixed rates - if interest rates do not drop for prime by July 1- I would look at the fixed interest rates and consider locking in ....time will tell..

In Like a Lion - ...Out Like a Lamb ?

Welcome to March 1st - the final day of RRSP season in Canada -bond rates are still drifting down and the 5 year is now 3.917 while the 10 year is 4.006..this should translate into lower interest rates over the next few weeks. The rates will not fall until the RRSP season is over - as we all know the banks make more money on the investment side than on the mortgage side...and while the RRSP season is in full form - they dont want to concentrate on mortgages - so rates are kept higher to slow the flow. Time will tell if we are correct - but with the recent drop in the bond market - the rates should return to the 5.09% for 5 years from the current 5.24% level.....or even lower...the next move will be to spur the spring real estate market -then a slow down in the summer until the fall.....lets see what happens....
greygoose

China hiccups - North America gets the flu....

Well today we saw how the world markets can interact - globalization was in full form and effect. China's stock market dropped approx 10% overnight and the sympathetic tsunami came ashore on the north american markets this morning causing a watershed of 400 points in the DOW and over 300 points in the Canadian markets. Gold was down - the baby might be thrown out in the bath water - time will tell tomorrow and later this week.
but what does that have to do with our mortgage market....well there will be a flight to safety which means bond yields will be pushed higher on greater demand and rates will move up - thus the potential for lower interest rates in the short term may be hampered.. however....
The US economy is definitely slowing on the back of a declining housing market - if the stock market follows - the average american will encounter the reverse wealth effect - in otherwords they will feel poorer than they are feeling today - this would possibly move them into a defensive mode of protecting their money rather than spending - this would force the US to reduce interest rates in order to hopefully spur the economy - this drop in rates internally might work but they may be forced to increase external rates in order to keep their dollar from plummetting - a very tricky situation.
For now - keep an eye on the bond markets in Canada - this morning the 5 year bond dropped below 4% as did the 7 year government bond - this is down from the 4.10% level of approx a week ago - if this persists - rates should drop - especially after the RRSP season is finished on March 1st .......lets see what happens. (greygoose out...)

February 21st - can spring be far away....?

As outlined previously - the bond market is softening at this point and we are seeing interest rate pressures ease. Perhaps the interest rates will return to the 5% level in the next few weeks, after the completion of the RRSP season for Canada. The Federal Budget is scheduled for March 19th - so there may be a lull until the budget has come out... I still think the only major problem can be the housing market in the US slowing to the point of taking their economy down - which would spill over to Canada. Also of note the margin on stocks is at an all time high...which means people are borrowing to play the market - could mean a correction is on the way......beware....

interest rate fluctuations

On January 16th - I warned that rates may be ready to increase to the 5.25-75 range - and lo and behold - it has come to pass - interest rates for 5 year money is now 5.19-5.25%
the question now- what happens next - well let me gaze into the crystal ball again - the US Central Bankers - think there is a soft landing instore - which should lead to a higher stock market and perhaps higher interest rates - there are 2 weeks left until the end of the Canadian RRSP period for 2006 - if rates dont soften in early March - we may be on the march to higher rates - but remember - with current rates of 5% - it is unlikely interest rates could climb more than 1% as this would represent a 20% increase which would likely trigger a recession and force rates down....time will tell...stay tuned