It looks like the chain reaction also works in the mortgage sphere.
Today it concerns Canadian banks dropping their fixed rates one after
another. On Tuesday the country’s largest bank dropped its posted rate for five-year fixed mortgage by 10bps (0,1%) to 5.59%.
The same thing happened to its special five-year closed - now it’s 4.44%. Of course, other large banks (TD and Scotia) have followed this trend and dropped their posted five-year closed by the same 10bps (0,1%) to 5.59%. It’s obvious that if this tendency goes on, the qualifying rate for variable rate and short term fixed mortgages will go down as well. It may fall from today’s 5.69% to 5.59%.
This week Bank of Canada governor Mark Carney gave another official
speech. This time it concerned Canadian economy and its position in the
world. Special attention was paid to recent changes in the global
economy. Carney said the U.S. economy doesn’t dominate any more.
Instead, two other countries have taken the lead: China and India.
It was noted that this transformation has just begun and it will take decades to unfold. For Canada such changes will have both positive and negative sides.
According to the latest report released by the Canadian Real Estate
Association (CREA), national resale housing activity softened a bit in
April. Actually, seasonally adjusted national home sales activity
fell by 4.4% in April 2011 as compared to March. It’s interesting that
the biggest declines were noted in some of Canada's more expensive
markets, such as Toronto, Vancouver and the Fraser Valley. Moreover, this decrease looks even more significant when compared to April 2010.
“The deal is that last year there were several factors which caused a great activity increase at the market: impending tightening of mortgage rules, forecasts of a soon interest rate hike, HST introduction in some of the provinces and many other temporary factors," - said Gregory Klump, CREA's Chief Economist. "That’s why it’s even more difficult to see the exact impact of the previous mortgage rules changes".