Here is and interesting video about mortgage rates
This video really addresses Bank of Canada Rates and the housing market and how that plays a role.
Here's more media to think about:
"Pressure grows for Bank of Canada to hike rates
Paul Vieira, Financial Post
OTTAWA -- Pressure on the Bank of Canada to move early on raising interest rates mounted Monday after data on fourth-quarter gross domestic product suggested the economy is roaring its way out of recession after recording the fastest pace of growth in nearly a decade.
The central bank could provide hints of a change Tuesday morning when it releases its latest statement on interest rates. Its plan for almost a year has been to conditionally keep its benchmark rate at 0.25% until July in an effort to pump up economic growth after the great recession.
Data from Statistics Canada suggest the emergency-level rates have worked their magic, perhaps faster and better than anticipated.
The economy expanded 5% in the final three months of 2009, blasting past market expectations for a 4% gain - and the bank's own 3.3% forecast - and setting the stage for robust growth this quarter. It is also the fastest pace of quarterly economic growth since late 2000. Further, the data were solid across the board, with personal consumption and net trade contributing to the performance.
Third-quarter data were also revised upward, with growth of 0.9% as opposed to the original 0.4% reading.
This comes on top of January inflation data that indicated price increases have moved closer to the central bank's 2% target earlier than envisaged.
"With growth being stronger than expected and inflation sticky ... we remain of the view that the Bank of Canada has the full green light to hike as emergency conditions have passed and with it justification for sticking to the zero lower bound on rates," said economists Derek Holt and Karen Cordes from Scotia Capital.
Yanick Desnoyers, assistant chief economist at National Bank Financial, said a rate hike could come as early as next month, when data might show the output gap - or the amount of slack in the economy - is narrowing faster than the central bank expected.
He added the headline GDP data might be underestimating how quickly economic slack is being absorbed. For instance, gross domestic income – or the sum of all wages, corporate profits and tax revenue – climbed by 8.5% in the quarter, the best showing since 2005. And that follows a 4.5% gain in the third quarter.
Sheryl King, chief economist and strategist at Bank of America/Merrill Lynch Canada, said she expects a rate hike in June, based on a belief the central bank will want to see through its conditional pledge for as long as possible.
Among the data points she said she found most encouraging was a 4% gain in real wage growth – defined as gains in household income excluding transfers from governments. The last time there was growth in this category was prior to the recession.
"This signals that risk taking and organic growth is coming back in Canada," she said.
Of course, not all analysts believe the data will push Bank of Canada governor Mark Carney to veer off course. Douglas Porter, deputy chief economist at BMO Capital Markets, said the data surely raises the odds of a July rate rise but anything earlier than that remained remote. Analysts at TD Securities also shared a similar view.
Also, the data contained one key blemish – a 9.2% drop in machinery and equipment investment by Canadian companies, which does not bode well for efforts to boost abysmal productivity levels.
The GDP data attracted investors, as the Canadian dollar gained a full US1¢, to US96.01¢, on the possibility of an early rate hike.
Canadian growth should remain robust as the global recovery takes hold. Business surveys released Monday indicated manufacturers continue to lead the recovery, with factory activity expanding last month across Asia, the United States and Europe.
Read more: http://www.financialpost.com/news-sectors/economy/story.html?id=2628952#ixzz0gySOg5Bz
Bank bailouts would have benefitted from sober thought, U.S. economist says By Rose Simone, Record staff— Robert Pozen would never say “never” to the need for bank bailouts in a financial crisis.
But Pozen, chair of MFS Investment Management, which is part of Sun Life Financial, and author of Too Big to Save: How to fix the U.S. Financial System, argues there should at least be some criteria established in advance to determine which institutions really are “too big” to fail.
“Doing these things over a weekend when people are panicked is not the way to go,” Pozen said this week in a talk at the University of Waterloo sponsored by Sun Life.
Pozen said the United States treasury committed money to 690 different financial institutions in the aftermath of financial meltdown of 2008. The U.S. response, which was fashioned in crisis mode, resulted in virtually any institution, big or small, getting a bailout, he said.
Pozen also made the case for reform of mortgage rules in the United Sates.
He said the mortgage lending industry in Canada is on firmer ground because most banks still require a reasonable down payment, and people taking out mortgages are on the hook if they default.
But in the United States, “even today, 50 per cent of all mortgage loans are done through the Federal Housing Authority, with a down payment of three per cent, and you can get a tax credit for that three per cent.” Also, people who default on mortgages are not held personally liable.
The likelihood of default is high when “you have nothing to lose,” Pozen said.
Pozen also explained how the collapse of the U.S. housing market led to a worldwide financial crisis.
In the years prior to the crisis, the U.S. government was swimming in deficits. Meanwhile, in the crisis that followed the Sept. 11, 2001 terrorist attack, interest rates were brought down and held down for five years.
In a climate of low interest rates, “yield hungry” foreign investors got heavily into mortgage-backed securities (mortgage debts bundled together) that were sold around the world, Pozen said.
The rising deficit is the major problem for the United States today, Pozen said. The U.S. current accounts deficit is $1.6 trillion or 11 per cent of the GDP this year.
U.S. households are still on shaky ground, he added. One-third of homes in the U.S. are “underwater,” which means the mortgage owed exceeds the value of the house, Pozen said.
People at risk of default have been able to get “mortgage modifications” to spread out their payments over a longer period, but as interest rates rise, the risk of “redefault” in this group is high, he said.
Pozen argued for better policies and regulations, saying financial crises are not as uncommon as people would like to think. Even using a conservative definition, “you will witness at least two or three financial crises in the industrialized world in the next 10 years,” he said"