BY MARTY HOPE, CALGARY HERALD FEBRUARY 5, 2011
No movement is expected this year on mortgage rates, says a federal agency.
Backtracking on earlier suggestions that rates could move in the second half of this year, Canada Mortgage and Housing Corp. is now saying they will remain stable.
It's good news for consumers, as well as for the resale and new housing industries.
"From the mortgage rate perspective, housing affordability in Calgary will not be hurt," says senior analyst Richard Cho of CMHC.
The posted five-year rate -- the one at which homebuyers must qualify to get a mortgage -- will likely hold at about 5.2 per cent, he says.
In its fourth-quarter housing market outlook, CMHC looked back at what happened with rates in late 2010, as well as the outlook for this year.
The Bank of Canada boosted the target Sept. 8 for the overnight rate, increasing it to one per cent, up from the previous 0.75 per cent.
It marked the third increase of 25 basis points since last April, when the rate was at a historical low of 0.25 per cent. A basis point is equal to one hundredth of a per cent.
With the overnight rate expected to remain flat, mortgage rates -- particularly short-term and variable mortgage rates -- are also expected to remain steady at current levels.
Posted mortgage rates will likely remain flat in 2011, says CMHC's base case scenario.
For this year, it is assumed the one-year posted mortgage rate will likely be in the 2.7 to 3.7 per cent range, while three-and five-year posted mortgage rates are forecast to be from 3.5 to six per cent.
However, rates could increase at a faster pace if the economy ends up recovering more quickly than currently anticipated. Conversely, rate increases could be more muted if the economic recovery is more modest.
In his inaugural address to some 700 members of the Calgary Real Estate Board, president Sano Stante said affordability will be a key element in the expected increase in resale home activity this year.
© Copyright (c) The Calgary Herald
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