Interest Rates, both short term (Prime) and long term, have been on the rise lately and are likely to move somewhat higher over the next few months. It now seems certain that the Bank of Canada will raise interest rates by 25bps in May when they meet again. This is supported by direct comments from the Governor (David Dodge) and the bond market. It is widely expected that that may be the last increase for some time after that. So Prime is likely to reach 6% and then stay relatively stable for some time after that.

The most recent release of economic growth at 0.2% as expected by the market also supports this thinking. Inflation numbers are within the target range of the Central Bank and Manufacturing in Ontario is still showing signs of weakness. Further, the dramatic increase in the value of the Canadian Dollar, the forecasts for a 93 to 95 cent dollar by the end of the year, and the resulting decrease in competitive value to our exports may slow down the growth of our economy and therefore rate increases.

This puts variable rate mortgages back into the mix as a good option for your financing options in buying a home. The lower rates offered by this product may save you significantly over the term of their mortgage, and I know lenders to get you a great deal!

If you have any questions or comments I would be happy to answer them.

Best regards


Joel Bates
Senior Mortgage Consultant
Mortgage Edge
416 721-2450