Chad Moore Calgary Mortgage Broker

What is the direction of Variable Rate Mortgages?  

I think lower.

Here’s why:

1. The U.S Federal Reserve is likely to cut their interest rate in July by 0.25%.  The U.S could cut their rates as much as 0.75% by the end of 2019.
   
   The Bank of Canada is somewhat tied to the direction of U.S interest rates.  Although we do not operate in lock-step with the U.S, the tendency is to move in a similar direction, eventually.
   
   
2. U.S and European inflation numbers are 1.8% an 1.2% respectively.  Consistent inflation numbers lower than 2% is a signal rates might need to be reduced.
   
   
3. The U.S Federal Reserve’s most recent interest rate announcement contained dovish language (low rate indicators) noting “softer indicators of fixed business investment”.  Business investment ultimately leads to employment and wage growth which drives the economy/consumer spending.  
   
   The U.S also mentioned “lowering their neutral interest rate range from 2.75% to 2.50%”.  Remember, a neutral interest rate is neither stimulative or restrictive to the economy. 
   
   
4. Should the U.S lower their rates, and Canada’s remain the same, the value of the Canadian Dollar will appreciate.  If the Loonie appreciates that will hurt Canadian exports (exports are 30+% of Canada’s total GDP) which is a net negative effect on our economy.  
    

This is an interesting spot for our Central Bankers.  Canadian inflation is actually higher than expected which is the opposite of other developed economies. 

Our inflation numbers are at, or just above the target 2%, but are still within the 1-3% range.  We have a bit of wiggle room to stay within our inflation target band before reacting to the U.S.

With Canada’s high debt-to-income ratio, and the effects of the most recent rate hike yet to take effect in our economy, it’s possible a small move down could get in front of lower inflation numbers in Canada?

I think it’s possible we lag the U.S interest rate cut.  But if the U.S is aggressively cutting their central rate, I think the Bank of Canada will have to respond. 

***

In conclusion, the general direction of interest rates in Canada is lower for reasons above.

I’m crafting a campaign for those in my database with opportunities to save.  

Here’s how this can happen for my past clients ….

The majority of my database DO NOT have restrictive Mortgages OR loans that are affiliated with branded Mortgage lenders. 

This will afford you the option of examining the re-placement of your Mortgage with a different lender, at a lower interest rate.  This is possible because there is not a massive penalty to exit.  

I am finding these opportunities for you and will be reaching out to explain.  Coming very soon!!

How would you like to lower your Mortgage payment by $200/month?

Talk soon,

Chad Moore

P.S

Congratulations to Scott McKenna & Shannon McLeod.  Two dear friends of mine were married this past weekend in Crowsnest Pass.

I was asked to MC their wedding.  And I was nervous.  Not for the obvious reasons of speaking in front of people …

But because I am a Toastmaster.  And everyone knows it.  I was putting  pressure on myself to “deliver“.  

I always thought one of the benefits of Toastmasters was to stem my nerves before public speaking.  Turns out that was not the case :-).

Fun times regardless!!