With most articles predicting a difficult year globally, demand for high-grade Canadian government bonds is still high. This means that most of the factors steering our rates in 2011 will continue to drive our rates in 2012. Rate-affecting news to keep your eyes on are developments in the European debt crisis, but also the election proceed in the US as well as the rate of growth in the developing world. What happens with these factors will affect Canadian interest rates just like having a garbage dump near your house affects you, it’s not a deal killer but we all know that if the wind blows the wrong way it could get a bit stinky.
Apart from the global factors, Canadian mortgage interest rates are also affected by what is happening in the bond yield market. The liquidity in the Canadian market in general influences the spreads at which mortgage rates are offered relative to Canadian government bond yields.This spread started to increase in late 2011 as investors demonstrated a preference for government bonds over alternative fixed income opportunities like GICs. The strengthening of this market shows that Canada is in a good position to keep rates relatively low for 2012, but don’t be surprised if there is a small rate increases throughout the year during the busy times, like summertime.
Variable Rates deserve a whole article to themselves. If you would like to know what is happening with Variable Rates these days, I highly recommend reading this article http://natpo.st/t6kzgr
If you would like to talk more about what is happening in the mortgage market, please do not hesitate to contact The MortgageGirls at firstname.lastname@example.org. Keep in mind, all this information is only in my opinion, I don’t expect everyone to agree with me.