Mortgage News.
RATES

Charles St-Arnaud, an economist at Nomura Global Economics, said Tuesday that while the Canadian economy desperately needs the stimulus, the central bank might be forced to cut rates the longer it takes details about the package to be revealed.

The likelihood of a Bank of Canada rate cut is rising as markets await details of Prime Minister Justin Trudeau’s promised stimulus package for the Canadian economy. Markets have begun pricing in a greater chance this week that the Bank of Canada will move to cut its interest rates sometime this year, with the overnight index swap market suggesting that about a fifth of participants now see negative interest rates by the end of 2016.

Following strong economic growth during the summer months, recent data suggests that the Canadian economy is starting to stall again. Gross domestic product shrank by 0.2 per cent in October as manufacturing, energy and construction sectors all continue to contract.

The Bank of Canada will hold its next interest rate announcement on Jan. 20, though governor Stephen Poloz will give a speech this Thursday in Ottawa that gives the market a clue on what policy tools he might deploy this year.

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TRENDS

This year, TD also became Canada’s first major bank to let people text customer service questions. It says that more of its customers are texting than using social media.

They’re watching you. They know when you express frustration about your mortgage. They know when you compliment or complain about them on Twitter and Facebook.

They’re your bank and they’re on top of social media like you wouldn’t believe.

The Big Five Canadian banks all have social media armies who are continually on the lookout for comments about their brand. They stand at the ready to support customers, process leads, collect customer feedback for the bank bigwigs, and diffuse negative comments.

Indeed, Canada’s financial titans are investing millions in social media. And for good reason. One in five Canadians now use the likes of Twitter and Facebook to gather mortgage information, up 43 per cent in two years, according to Canada Mortgage and Housing Corp.

As for complaining about your mortgage rate online, there’s no research to show that protesting your bank’s mortgage terms on social media gets you a better deal, but people do it anyway, and banks answer fast.

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RATES

ADVICE

The difference between the interest on a variable-rate mortgage over a fixed-rate loan has shrunk compared to where it was just a few years ago, making fixed-rate offerings more tempting.

The difference between the interest on a variable-rate mortgage over a fixed-rate loan has shrunk compared to where it was just a few years ago, making fixed-rate offerings more tempting.

Mortgage adviser Toma Sojonky says a recent move by lenders to prune their discounts to the prime rate for new variable rate loans has borrowers pausing and considering their options. Combined with fixed rates drifting lower, Mr. Sojonky also says some borrowers with variable rate mortgages are starting to make the switch and lock in their loans.

“Variable-rate clients who touched base in the spring and vacillated are now calling back with instructions,” said Mr. Sojonky, an adviser with Verico Paragon Mortgage Group in West Vancouver, B.C. “We saw fixed rates begin to inch up in the summer, only to drift down again recently – and some clients are pouncing in reaction.”

According to RateSpy.com, the best five-year fixed rate in Ontario last week was about 2.28 per cent, while the best five-year variable rate mortgage was 1.75 per cent. That gives the variable-rate mortgage just a 0.53 percentage point advantage over the fixed-rate offering and if the Bank of Canada starts to boost its key interest rate next year, that advantage will shrink even smaller.

“If you’re only looking at the interest rate spread, then it probably makes sense to take a five-year fixed if you think there is any likelihood of the Bank of Canada increasing rates any time soon,” said Jason Scott, an Edmonton mortgage broker with TMG The Mortgage Group. However, Mr. Scott says you need to consider more than just the rate, especially if you think you might have to sell your house or refinance your mortgage before your term is up.

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WORLD

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