Mortgage renewals are becoming a hot topic as Canadians weighing their home refinancing and mortgage renewal options continue to wrestle with a wealth of information about the economy, the housing markets in Canada and where interest rates are headed. The Canadian economy and world economies, in general, seem to be in the midst of turbulent times.



Reports from the annual meeting of the Bank for International Settlements held this week in Basel, Switzerland indicate that rising inflation fuelled by rising energy and commodity prices is weighing heavily on the minds of the gathered officials from the central banks that are charged with overseeing their countries' monetary policies.Reuters News Agency reports that policymakers from the world's central banks are “on high alert to the dangers posed by rising inflation and slowing growth,” although there does not appear to be a “one-size-fits-all solution.”

In Canada, the economy continues to grow, unlike that of the United States that continues to struggle with the fallout of difficulties in its financial and housing markets. On June 3oth, Statistics Canada released its latest report on the state of Canada's economy, which show that the overall economy grew by 0.4% after contracting in February and March.

This news should buoy Canadians, although it raises questions of what the Bank of Canada is likely to do with Canadian interest rates when they reconvene to set their main lending rate on July 15th. “Bank of Canada Governor Mark Carney and Finance Minister Jim Flaherty both say they've done enough to help the economy for now, with four rate cuts starting in December and C$60 billion of tax reductions announced last year,” reports Bloomberg News.

The question for Canadian homeowners and housebuyers is where mortgage rates are likely to go in the near and midterm, what with rising commodity and energy prices and record heights in oil prices making news on a near-daily basis. The consensus of Canadian economists seems to be that the Bank of Canada will keep the rate at which it lends money to Canada's financial institutions at its current 3.0%. (The Bank of Canada's main overnight lending rate is the benchmark for the prime rates set by Canadian banks and trust companies.) However, the Bank of Canada took analysts by surprise on June 10th when it failed to cut its interest rate in order to stimulate the economy, although this was the near unanimous consensus prediction amongst industry insiders. At that time, the Bank of Canada's Governor, Mark Carney, cited rising commodity and energy prices as the principal reason for holding tight on interest rates.

Since June 10th, Mr. Carney and other Bank of Canada officials have continued to express their concerns about rising inflationary pressures on the economy. These concerns are punctuated by reports coming from the Bank of International Settlements meeting this week in Switzerland.

While the consensus amongst the banks analysts is that the Bank of Canada's rate will not ease higher when the Bank of Canada reconvenes to examine its main rate on July 15th, Canadians wrestling with mortgage renewal questions may want to consult with an independent mortgage broker to survey the rates and products that best fit their refinancing needs. Inflation remains a very real spectre worldwide, and although Canada's markets are in better shape than most – in no small part, because of our strength as a commodity and energy-producing nation - it may be time to switch from a variable-rate to a fixed-rate mortgage to take advantage of rates which are still very favourable in their historical context. An experienced mortgage broker can not only provide the independent advice Canadians need in turbulent times, but they are also able to tap into mortgage lenders and products from the whole array of Canada's public and private lenders.