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Mortgage Broker News | 14 May 2015, 09:20 AM Agree 0
The good times might be coming to an end for homebuyers – and brokers – if this panel of experts is correct with its rate prediction.
  • Darr Robbins | 14 May 2015, 05:24 PM Agree 0
    IMHO, although bond yields have increased slightly in the short term, readers should not be swayed into believing that the longer term trend in falling yields has reversed. This compressing yield trend will continued much longer as there are no practical solutions for banks and governments to exit the mess they have created.

    Western governments are running massive deficits at current yields. They will certainly fall off the fiscal cliff should rates normalize. Central banks will not allow this to happen as it would surely drag the over-leveraged citizens, corporations and financial institutions along for the fall. Consequently, the Bank of Canada will continue their bond buying binge to prevent a massive de-leveraging that would otherwise trigger an economic depression. These bonds will be purchased with newly printed dollars thus diluting the purchasing power of those dollars already in circulation. This is extremely inflationary. Income will continue to be diverted to staples at the expense of discretionary items. Expect the prices of things you need to rise while the prices of things you want will fall.

    In the longer term, mortgage rates may still compress to keep up appearances however credit issuance standards will be more stringent and selective. Mortgage renewal could become a significant risk going forward.
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