Mortgage, Money and Dream – Our thoughts on Canadian Mortgage Market
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A poll result published by Reuters today says that Bank of Canada is not seen to be raising interest rate till end of 2012.

This is good news for the borrowers who are in variable rate and have discounted variable rate. This is not so good news for the would-be home buyers who are thinking for a variable rate. The reason for that is – the lenders have almost removed any discounts offered on a variable rate product. Some fixed rates are often lower than variable rates.

No reasons were cited – for the gradual removal of discounts on VRM products, but one can guess that the increasing popularity of variable rate, prolonged pause on BOCs’ behalf to raise the overnight rate, European calamity sure pushed some investors into Canadian coasts and increasing cost of fund due to talks of strict implementation of BASEL-III reserve / capital ratio requirements.

The poll also predicts a rate cut sometime in mid 2012. The end of 2012 forecast stands at 1.25% according to the report down from 1.5% as forecast previously.

Please do not be too optimistic as these forecasts tend to change frequently.