Market and Mortgage News - May 30th, 2011 - Edmonton & Calgary


First Foundation Best Rates to Open the Week:

Term Rates
1 Year 2.64%
2 Year 3.23%
3 Year 3.42%
4 Year 3.52%
5 Year 3.79%
7 Year 4.79%
10 Year 4.99%

ARM / Variable 2.15%
Line of Credit 3.50%

Prime Rate 3.00%
Qualifying Rate 5.59%

Market News

( Excerpted from and article on Reuters)

Toronto’s main stock index ended the day and month lower on Tuesday by 26.78 points, or 0.19 percent, at 13,802.88

Canada’s dollar shot to its highest level against the U.S. currency in more than a week on Tuesday, while and bond prices retreated, after the Bank of Canada surprised investors with some hawkish talk in its policy statement.

The central bank kept its key interest rate unchanged at 1 percent but seemed to convince the market that it will have to lift borrowing costs “eventually” if economic growth continues causing the dollar to rally and soar as high as $1.0359, up from $1.0285.

The rally cooled a bit, however, by the end of the session as the market came to terms with possibly having to wait a few more months for rate increases to resume, and as worrisome U.S. economic data cast a shadow over Canada’s growth prospects.

Mortgage News

The Bank of Canada is expected to resume raising interest rates in September, according to a Reuters poll of primary dealers conducted after the announcement. Overnight index swaps, which trade based on expectations for the key central bank policy rate, also showed investors slightly reducing the likelihood of a rate hike in July, but increasing the odds of tightening in September, October and December.

The BoC’s strong signals about forthcoming rate hikes may have been in response to the recent drop in fixed mortgage rates due to lender’s confidence that the key interest rate would stay put for an indefinite time.

“I think the bank was uncomfortable with the market starting to assume that it was going to wait forever to begin hiking and with the resulting impact on mortgage rates, which
have been falling,” said Avery Shenfeld, chief economist at CIBC.

Indeed, mortgage rates were moving downward last week, bringing First Foundation’s best five year term back down to 3.79%. If you are considering purchasing a home over the summer or early fall, June is the perfect time to obtain a pre-approval which will lock in fixed rates for 90 to 120 days, protecting you from anticipated rate hikes in the coming months.

Contact one of our licensed mortgage brokers to learn more or fill out our handy, online mortgage application.

As the company’s first employee, Jennifer has been a Licensed Mortgage Associate since 2004, but her current role is not focused on mortgages. She is the resident blog writer and…

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