Its looking like there's reason for the B of C to gradually increase the overnight lending rates (short terms). These affect variable rates mortgages indirectly as they're tied to the prime rate. So barring some seriously corrupt news from the US, this would be my guess.
That said, we find ourselves in an environment where fixed rates with the likes of the 5 yr rate going down. Royal Bank just dropped their posted rate.
Why? In short, the US is worried about deflation as oppose to inflation. There's talk of the FEDS injected money back into the economy by way of buying up long terms bonds, thus creating the demand to keep rates low and flushing banks with more money to lend and not hoard.
This money in theory should go to writing mortgages and stimulating the economy. But US households are on a savings kick and unemployment should inch up.]
Put all that together and fixed bonds yields should fall. The more who run into the bonds for safety lessen the yield that needs to be paid. People are happy with low yields these days as long as they're not losing money.
B/c Canada is linked to US the bond market rally continues here and as a result fixed rates are temporarily going down, while prices have certainly gone up year over year, a more balanced market should keep prices flat.
So, once again BUYER's go get preapproved, start looking at homes and for god sakes find a good agent.
visit http://www.TheSmithsBuyAHouse.com
Cheers-
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