Core inflation jumped surprisingly last month to 2.4%. That’s tempered rate-cut expectations, at least somewhat. (Globe & Mail)
Credit market traders are still pricing in a 100% chance of a 1/2% rate cut by the BoC’s January 20 meeting. (CEP)
TD chief economist Don Drummond agrees: "I think the next meeting of the Bank of Canada will cut another 50-basis points." (CTV)
Desjardins says: "In Canada, key interest rates should end their descent at 0.75 % in January 2009." (That’s 3/4% lower than where they are now.)
The fun won’t last forever. CIBC economist Benjamin Tal sees a 1.00% to 1.20% increase in rates following the economy’s recovery late next year. (CMP)
“A modest recovery should begin in the second half of the year.” – BMO economist Doug Porter
"If you want to know where mortgage rates are heading, watch the yields on government of Canada bonds. That’s what mortgage brokers do." – Former CIBC Mortgage CEO, Brendan Calder
Despite the massive drop in yields, there’s been no bounce. The 5-year Canada bond yield, upon which 5-year fixed rates are based, is still just 1.82%. CIBC says “there’s room to drag bond yields a bit lower still.”
AMA Financial says "prime plus" is for sissies. They’re the only Canadian lender advertising prime minus variables (prime – 0.30% to be exact). The main catch: you have to live in Alberta. How do they do it when most lenders are at prime + .60% or more? They apparently have money to lend from their balance sheet. Perhaps they’re also hoping variable-rate customers later lock into AMA’s above-market fixed rates.
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