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MacLean's market musings for Sept 12

Blog by Nick Swinburne | September 12th, 2013

In Europe, declining factory output has renewed concerns about the pace of recovery for one of the world’s largest economic regions.  The path to sustainable economic growth still looks like a long rocky path for the European Union.   Progress is being made but it seems to be a situation of three steps forward and two steps backward.  The most positive news out of the region came from the UK, which saw unemployment fall to 7.7% in July.  The Bank of England has committed to keeping the main interest rate at current levels until unemployment falls below 7%, which  could happen late next year at the current pace.

In the US, last Friday’s jobs report was disappointing and has caused many analysts to change their opinions on the expected tapering of the Federal Reserve stimulus program.  Most still expect the Federal Reserve to announce the start of  tapering next week but with a smaller reduction than originally anticipated.   This caused some weakness in the US dollar against other major currencies.

The potential for US intervention in Syria has dissipated somewhat which has reduced the anticipated risk of higher oil prices to the global economy.

In Canada, last Friday’s jobs report was surprisingly positive. This combined with the poor US jobs report caused the Canadian dollar to jump and it has kept moving up this week to the current level of $0.9682.   Anyone looking to buy US dollars in the next month should keep an eye on exchange rates as daily jumps of a half cent or more can be expected over the short term.

Canadian bond yields continue to creep upwards and this has caused many lenders to bump up fixed term mortgage rates again.    The increase in rates over the past two months has been steady and has resulted in 5 year terms increasing from June lows of 2.79% to the current range of 3.49% to 3.79%.   This trend shows no sign of slowing significantly so most consumers are encouraged to get rate holds if they are considering new purchases, refinances or renewals that are within 18 months.

Please remember that 80% financing is available for qualified US residents at great rates!

I am always available to assist you and your clients.

Cheers, Jason.

Jason McLean   BSc, AMP
The Mortgage Centre: Garibaldi Mortgage
fax: 604-905-3801
cell: 604-935-9190