Garth Ellis quoted in Canada Mortgage Magazine "Industry Reaction to BoC Increase"

TORONTO, June 1 /JAC/ – A number of well-known industry experts today offered JAC News their thoughts on this morning’s Bank of Canada overnight rate increase.

Angela Calla, AMP, of Dominion Lending Centres in Port Coquitlam, BC states that “This announcement was very much as expected as it reflects that our economy is strong and that the stimulus appears to have worked. It is not likely that we’ll see aggressive rate hikes in the immediate future due to the fragility of the global, especially European, economy”.

John Panagakos, AMP, Principal Broker, The Mortgage Centre, Toronto offers that it is too early for such a rate hike. “Just as our economy is showing strength we hit it an obstacle. We should wait for 3-quarters of GDP increases before we make changes that will impact the engine of our economy! Like I said at the first light of GDP growth, the government imposes these obstacles when we should let the economy recover in good time then increases to BOC rate will be expected”.

In a report issued today by RBC Economics, Dawn Desjardins, Assistant Chief Economist, RBC Economics comments that the Bank of Canada’s announcement and accompanying statement “supports our view that the Bank views domestic economic conditions as strong enough that the ultra-low level of interest rates is no longer needed and that the recovery can withstand a gradual rise in interest rates going forward. To that end, we expect that the Bank will raise the policy rate to 1.5% in 2010 and that the tightening will continue in 2011 as the Bank moves the policy rate closer to neutral by the time Canada's output gap is eliminated”.

Garth Ellis, AMP, President, VERICO Ellis Mortgages Canada, Vancouver, BC comments that “The Bank of Canada’s ¼% increase seems to have been widely anticipated by many Canadian mortgage consumers. As a result, much of the public appears to be receiving news of the rate hike with a collective yawn. Some experts are already anticipating that the Bank of Canada will be very cautious regarding their next decision to increase the Rate”.

Marshall Spencer, AMP, a twenty-six year veteran and now broker at Prime Rates (RMA) in Durham Region, Ontario, brings his thoughts to bear “My hope is that this long expected adjustment does not scare consumers into locking in their mortgages. Today, discounting on variable rate mortgages is almost back to where it was in the late summer of 2008 when the huge adjustment in variable rate pricing took place. I feel there is still time to ride the variable rate and am doing so myself with my own mortgage".

Mr. Spencer, continues "People need to remember that rates are still close to historical lows. Not too long ago, many borrowers were scared into converting to fixed rate deals or extending soon-to-mature fixed rate mortgages by certain market participants. When the increases didn't appear, borrowers were left fuming and were stuck with high rate fixed mortgages they couldn't get out of”.

“At this time, it looks as if it will take more than one, ¼% increase in rates, to compel variable rate mortgage holders to convert to fixed rates”, concludes Mr. Ellis.

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Reporting: Stewart Eadie, JAC News