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Dear Clients,

Now summer is here!  This is when you have to make sure you wear your shoes down to the beach or you will never make it down to the water.

I thought the Bank of Canada was going to move another .25% this month but not a word!  I guess it could be from the definite drop in production now that the stimulus of "beat the HST" and south of the border the housing stimulus packages dried up back in May.  I guess now we are on our own.  The Update below still confirms that the recent extreme drop in production is either signaling a returning recession OR indicates an extremely slow recovery.  As some of my very astute clients have been saying for a year or so - interest rates aren't going anywhere for another 5 to 10 years.  I must say those comments were a little gutsy at the time but it looks like you may be right!

So make sure, those even contemplating changing your below prime mortgage to a high fixed rate (rates quoted below) can go back to your back yards and relax.  Do not change a thing.

To make it quite clear we do not advise locking into a fixed rate mortgage.  Again if you are OVER prime on your mortgage please contact us and we should change you to a below prime mortgage right away.

Prime is now 2.5%

Some great news - this year The Personal Mortgage Group has finally hit the big leagues!  We are neck and neck with two other top brokers in Canada, not just the top 25 brokers anymore.  It has been a record breaking year and we are striving to continue to improve our #s.  Michelle Baas, my assistant, is key to our production.  We are so efficient that two of us are competing with teams of 5 to 8 people.  Of course your loyalty, both by returning for your mortgage business and referring your friends and family to us is the biggest key.

The Spec Reader's Choice is coming up this month.  This award really makes a difference in our advertizing and the general public recognizes it as a vote from existing clients.  We set up your access to work as fast as we can get you in and out of the voting site.  I can not put a price tag on the value of your votes - your confidence in supporting us is our biggest thank you. 

Fixed Rates available  Prime still 2.5%

3 yr 3.85%

4 yr 4.29%

5 yr 4.39%

Have a great week - remember only 7 weeks of summer to go so make sure you make the most of it with your families.

Regards,

Suzanne Boyce
Broker\ Owner

Weekly Market Insight

NORTH AMERICAN & INTERNATIONAL ECONOMIC HIGHLIGHTS

Economics gets interesting for markets at inflection points, and that's exactly where the global economy sits as spring turns to summer. But are we seeing a turn for the worse - a period of slower, or slow growth - or a turn for the worst, towards renewed recession?

After their recent pull-back, equities might be able to muddle through the former, but would have a lot of additional downside if it's the latter. Two-year Treasuries are back at the lowest levels since the depths of the recession, reflecting the consensus view that whatever fate awaits the US economy, the Fed is a long way away from a tightening. But equities are, of course, still miles from their March 2009 lows, and are counting on earnings gains, not a recessionary dive in profitability. Trouble is, a turn to a slowdown looks much like a turn towards outright recession in its early stages. That's particularly the case when the prior period saw very robust growth. China put in 12% growth in the year to Q1 2010. In Canada, we are coming off two quarters averaging 5½% growth. The US wasn't quite so heated, but averaged better than a 4% pace in the two quarters ending in March.

Our own long-held view is that the global economy will see much slower growth ahead, with a trough at only 1½% growth in both Canada and the US by Q4. If so, we shouldn't be shocked, shocked, to see purchasing managers indexes for both the US and China move lower, as they did this month, but to levels still consistent with growth. Today's anemic US private sector hiring wasn't the deeply negative figure associated with recession onsets, but was in line with the deceleration to below trend GDP growth we expect in the quarters ahead. Housing data were boosted by tax incentives, so again, a big drop in the month after their expiry is not a surprise. Our two favourite aggregate US measures, the comprehensive Chicago Fed National Activity Index, and the leaner but more contemporaneous ADS index from the Philadelphia Fed (Chart), are still both saying green for growth, if a bit less vociferously in the latter.

Closer to home, Canada's flat GDP for April, was consistent with a deceleration in growth, rather than a turn to recession, given that it came off of a bloated 0.6% March advance. May GDP looks to be much better, as we already know it was a decent month for hiring. But don't be surprised to see the week ahead's Canadian jobs data for June show a deceleration. That's the stuff that slowdowns are made of.