The good news: Bond yields fell today to their lowest point since April 2009, which means the fixed rate party continues.
Very few analysts now expect an October 19 BoC rate hike
Discounted fixed rates may drift lower (perhaps 5-10 basis points in the next week, barring a rebound in yields).
Today’s news has minimal effect on variable mortgages, apart from prime staying put for a while. Variable rates have inched as low as prime – 0.85% for a no-frills (watch those no frills mortgage restrictions!).
We’ll see if the big banks throw us a bone and drop posted fixed rates. The Big 5 are operating on a fat 352 bpsspread (between the posted 5-year rate and bond yields) but they’ve been reluctant to move since August 23rd’s cut to 5.39%.
"The market had basically priced the Bank of Canada out (of further rate hikes). This won't do anything to change that." — Doug Porter, BMO economist (Reuters)
"This (employment) report is not disastrous. Certainly it supports the growing market participants' view out there that the Bank of Canada will take a pause on October 19." — Sebastien Lavoie, LBC economist (Reuters)
Economic growth should return to 2% by mid-2011, which would “give the Bank of Canada some justification in raising rates. But even then, we don’t see rates going up quickly.” — Krishen Rangasamy, CIBC economist (Bloomberg)