I always appreciate reading Jason McLean's market musings every week. He gives concise updates on global economic factors and where direction lenders are heading with mortgage rates. With the Bank of Canada holding firm and not lowering its key overnight lending rate, I felt it was a good time to share Jason's update on my blog.

"The Bank of Canada (BoC) kept the overnight lending rate unchanged at yesterday’s rate meeting. The BoC is waiting to see when the federal government’s infrastructure spending will begin and how large it will be as this spending will have a stimulative effect on the economy. The BoC is also wary about additional fuel to the hot real estate markets of Toronto and Vancouver. The low loonie is also boosting the prospects of central Canada’s manufacturing sector and dramatically boosting tourism numbers which will offset economic losses in the oil sector.

The loonie fell dramatically this week, falling to almost $US0.68, as oil prices fell to 12 year lows. The loonie is up to just over $US0.70 this morning due to oil rebounding as global markets continue to rally on every possibility of additional stimulus in major economies. This latest rally was encouraged by the possibility that the European Central Bank will increase stimulus measures. However, oil supplies continue to pile up and the current rally is likely to be short lived. The dollar will likely retreat to the 68 cent level and quite possibly continue to fall to 65 cents unless there is a major shift in the economies of China or Europe.

Canadian bond yields have dropped significantly over the past month but this is not resulting in lower fixed mortgage rates. In a normal economic environment, bond yields are the primary driver of fixed mortgage rate changes. It is important to remember that major banks make almost nothing on mortgages when rates are this low. The banks just want mortgages so they can make money from banking fees, loan insurance and other complimentary products, etc.. Many consumers take the path of least resistance and stay with their primary bank for the sake of convenience when greater savings can sometimes be realized by maintaining products at a couple of financial institutions. This strategy allows the consumer to have some negotiating leverage when loans or investments mature.

Many mono-line lenders still have 5 year fixed terms available at 2.69% and lower. These lenders won’t finance all Whistler properties, but for owner occupied, regular residential properties these rates are attainable. These lenders are often only available through mortgage brokers."

For more information on mortgage options, please contact Jason:

Jason McLean, BSc
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The Mortgage Centre: Garibaldi Mortgage
www.garibaldimortgage.com
fax: 604-935-3390 cell: 604-935-9190