Canadian Mortgage Rates Drop Again In August 2010

Aug. 19, 2010 - PRLog -- http://www.WorldWealthBuilders.com
The posted five-year closed mortgage rate is now 5.49 per cent annually for the Royal Bank of Canada, Bank of Montreal, Scotia bank, CIBC and Laurentian Bank.

RBC was the first to announce the rate cut. It is the second time major Canadian banks have trimmed their rates this month, and follows the report from the Canadian Real Estate Association that home sales were down 6.8 per cent in July from the previous month.

Fixed mortgage rates are heading lower as Government of Canada bond yields have been declining recently. We’ve seen the benchmark 5 year bond yield drop by 14% in the past month and 6.6% just in August.

“There are several factors which are affecting Canadian interest rates. Real Estate market including recently introduction of HST in British Columbia and Ontario, fear of rising interest rates and changing the lending criteria as well as US and south European economy” says Navtaj Chandhoke, founder of Professional Real Estate investors Group (PREIG) Canada. B.C. and Ontario accounted for roughly 85 per cent of the slump, as the implementation of the harmonized sales tax this summer pushed many home buyers to purchase earlier this year, the association said in a statement.


Recent report showed Canadian housing sales were down 30 per cent, most major banks announced they were cutting mortgage rates. Most banks trimmed mortgage rated by one tenth of a percentage point. The move brings the five-year closed rate down to 5.49 per cent. The move doesn't affect the one-year closed rate for mortgages, which is holding steady at 3.30 per cent at most institutions.

Meanwhile a report from the Canadian Real Estate Association showed housing sales dropped by 30 per cent nationwide last month, largely due to a new tax in British Columbia and Ontario that experts say deterred home buyers in two of the country's hottest housing markets. The association reported a 6.8 per cent drop in home sales through its MLS service, compared with June numbers.

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