A 180 Degree Change in Mortgage Rate Views
This article was provided by Deborah Fehr of Dominion Lending. She says that: It is a great time to buy a home in Kamloops. Mortgage rates are at almost rock bottom levels and it looks like there may be a rate cut instead of increase in September. Of course if you have a rate hold now and rates go down before you close your deal, you will get the lower rate. Read the article I included below.
46% probability of a rate cut Sept. 7. 100% probability of a rate cut by year-end.
That’s what prices of closely-followed overnight index swaps (OIS) were implying at the close of business on Monday. OIS trade on market expectations for Bank of Canada rate moves.
That amounts to a 180 degree swing in market psychology. Just a few weeks ago traders were pricing in a rate hike by January.
“As we’ve seen, markets can swing and perception can swing quite aggressively, and we could well be back to a fall expectation [of a rate hike] in a month’s time,” said RBC economist Eric Lascelles to the Globe & Mail.
Lascelles counterpart at Scotiabank, Derek Holt, says: “Any talk of the Bank of Canada hiking this year is just foolish in my opinion.”
Peter Gibson, chief portfolio strategist at CIBC World Markets notes: “I think it’s clear that there are a lot of serious problems still in the world and it’s more likely that we’re setting the stage for a sustainably low level of interest rates for a very long time.”
And that is the takeaway here.
Despite the roller coaster of emotions as of late, this about-face in rate assumptions reminds us of the necessity to focus on long-term trends. Long-term, North America’s prognosis still seems compatible with low-growth and low-inflation. That’s an environment where fixed mortgage rates typically underperform.
Link to article.Deborah Fehr, Mortgage Consultant, Dominion Lending P. 250-571-2472 E. ac.gnidnelnoinimodnull@rhefd W. www.dfehr.ca