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TORONTO, ONTARIO–(Marketwired – June 11, 2013) – It’s been warned of for months: after reaching record low levels over the past year, mortgage rates are in for an increase. Canadian bond yields have risen as of late, causing lenders to respond with a hike to fixed mortgage rates. However, variable mortgage rates will maintain the status quo, as instability among Canada’s largest trade partners and sluggish domestic economic growth lead to no change for the Bank of Canada’s Overnight Lending Rate.
Fixed Mortgage Rates: Up
Government of Canada bond yields, which set the bar for fixed mortgage rates, experienced an increase early in the month. This may prompt lenders to respond by raising their fixed mortgage offerings, however, a dramatic rate hike is unlikely given current competitive market factors.
Variable Mortgage Rates: Unchanged
Canada’s economy remains on track to reach capacity, but conditions have not recovered sufficiently to cause change to the current cost of borrowing. It is not anticipated that incoming Bank of Canada governor Stephen Poloz will change the Overnight Lending Rate in the next announcement on July 17, and economists expect such stimulus to remain in effect until 2014.