“TD has already dropped their rates by 10 basis points, so monolines can’t get ahead (of them),” Dustan Woodhouse
of Dominion Lending Centres
Canadian Mortgage Experts told MortgageBrokerNews.ca. “It’s a great opportunity for one lender to cut an additional five basis points.”
Woodhouse does admit, however, that a mere five basis point slash won’t draw a great deal of business to one lender because the markets are so busy. He also expects most lenders to follow TD’s lead in the coming days. Some, including RBC, BMO and CIBC already moved to slash their own by 15 basis points Wednesday afternoon.
It’s a viewed shared by Mark Cashin of Verico
Cashin Mortgages, who believes there is room for lenders to go even lower.
“I think there is room for rates to go down even more,” he said. “The economy is fragile in Canada and offshore; I think the banks will bring it down past that 10 basis points now that TD has done it."
“The others may see it as an opportunity to win clients.”
The Bank of Canada announced Wednesday that has cut its overnight rate target to ½ per cent, citing lower-than-expected economic growth.
“The Bank’s estimate of growth in Canada in 2015 has been marked down considerably from its April projection,” the central bank said in a release. “The downward revision reflects further downgrades of business investment plans in the energy sector, as well as weaker-than-expected exports of non-energy commodities and non-commodities. Real GDP is now projected to have contracted modestly in the first half of the year, resulting in higher excess capacity and additional downward pressure on inflation.”
And it’s good news for the industry, according to Cashin.
“I think it’s great for people with mortgages and it’s good for us,” Cashin said. “We’re in the business of lending money and if we can lend for cheaper today than we did yesterday it gives us a good excuse to call clients.”
The recent Bank of Canada cut has opened up a great opportunity for monolines, but will they cease it?