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June 2006

Market commentary & Interest rate trends

The Bank of Canada (BOC) increased the overnight rate by 1/4% to 4.25% on May 24.  Economists are predicting that this will be the last increase for a while.  Some economists are predicting a drop in the rates by mid-2007 when the full impact of the rate increase is felt. 

There is still some savings with a variable rate mortgage.  The best variable rate is at Prime less 0.90% or 5.1%.  Compare this rate against the best 5 yr fixed rates which are at 5.35%.  Although the gap is not large, there is a potential to increase if rates drop next year as some economists are predicting.  For more information on the best interest rate strategy, please click on this link 

Rates and Charts

Prime @ 6.0% (next review on July 11, 2006)

Term	Apr 14	Apr 21	Apr 28	May 5	May 12	May 19	May 26
3 year	5.15%	5.15%	5.20%	5.30%	5.30%	5.30%	5.30%
5 year	5.25%	5.25%	5.25%	5.30%	5.30%	5.30%	5.30%
10 year	5.35%	5.35%	5.35%	5.55%	5.55%	5.55%	5.55%

Table shows the discounted residential mortgage rates for 3, 5 and 10 yr closed fixed rate mortgages

For a longer term view, click here to see the 3, 5 & 10 year best residential rate since September 2003 (updated monthly)

Click to view other relevant graphs

 

1) Graph of 5 year residential mortgage rate and prime rate since 1951

2) Graph of 5 year posted rate since January 2000

3) Graph comparing the 5 year mortgage rate versus variable at prime - 0.80%

The Smith Manoeuvre - Is your mortgage tax deductible? 

Many homeowners don’t know that they can make mortgage interest tax deductible using a technique developed by Fraser Smith, a Canadian financial planner. This can be achieved through the Smith Manoeuvre. This is a CCRA-approved, tax-saving method used by the wealthy to turn their mortgage debt into annual tax refunds.

I am holding a seminar on the Smith Maneeuvre.  You must not miss this highly informative and money saving seminar.  The next seminar will be held at the Richmond Public Library on July 26 at 7 pm.   Space is limited to please email me at johnso@bcmortgage.ca for registration information..