Financial good news!

To prepare a report that gives good news is invigorating and exciting, bringing prospects of a return to a stable market place in the near future! However with this improvement
in economic indicators comes a realization that we may have reached the bottom of the rate cycle we have currently experienced!

Good News:
...TSX hits 10,000 again, a benchmark if for nothing else psychologically providing greater confidence that the economy and markets have turned the corner!
...Dow Jones up again, continuing a growth pattern powered by news in the USA that job losses are slowing
...Oil – up to $56.34 a barrel – hitting a 5 month high
...Canadian Dollar up to 85.78 USD, hitting a 6 month high
...Gold – up $6.70 to $911.00 USD per ounce, again rebounding
...Canadian 5 year bond yields up to 2.02 – Four weeks ago it was 1.72!!!! The spread is reduced to 1.76 as well. Now here is where we mix good news with some bad! For
Mortgage Lenders, the TSX gain generally means that a corresponding sell off of Bonds is happening, people selling their secure bonds and going back into the market.

We have seen yields on the bonds increasing slowly but steadily for a few weeks now! And the past couple of day’s good news could send them even higher, as theyneed to
increase these yields to keep people buying/investing in them!

OK, OK, talk English you are all saying!!! Well, I do not know how to put any plainer than this, if this trend continues over the next few days stretching to a week, you will see the lenders Quick Close Rates increase, or be dropped totally as a product, and the current posted rates INCREASE!! Many of you will say that Carney from the Bank of Canada said that rates were not moving for the next year! Well, the rates he controls are totally different from the 5 year rates, as the benchmark rates he orchestrates deal with Variable Rate Markets, driven by increases and decreases in Bank of Canada Prime rates! He may well keep those prime rates where they are for the next year, but in no way does this affect what happens to the 5 year rates! The fixed rated market is driven by bond yields the lenders can achieve, and as we can see it is costing them more money today to retrieve money to lend as mortgages than it was 4 weeks ago!

I suspect we will see some up and down movement on all the markets, but the eventual growth pattern will continue, leaving the lenders with no choice to raise our current fixed rates! It could happen sooner than later!

To all who read this, make sure everyone who is interested in buying Real Estate knows they need to get off the fence soon! Contact your local Real Estate Professional
and get in while the going is good!

(prepared by Rod Minnes/Managing Broker/Globel West Mortgage Ltd.)