Perhaps for the first time in my life, I can honestly say my timing was right. I sold my old house in March and arranged the mortgage for the new one starting in July. At the time, I asked for a variable rate with an option to switch to a fixed rate, in case I felt rates would be going up. I also locked my rate one percent below prime to be adjusted every quarter.

This is how I went the entire summer paying a variable rate on my mortgage of 4.75%. And, with rates expected to go down even further, I'm certain my decision to go with the variable rate was the right one. By the way, most of my friends advised me, incorrectly, that I would be better off with a fixed mortgage.

Since peaking this summer, mortgage rates in Canada have fallen. Even so, experts are certain there will be more savings to come. Economies on both sides of the border are slowing down. This should result in decreased costs of borrowing, which should also reduce the amount of panic among homeowners already drowning in debt.

As far as Canada's dollar is concerned, the Bank of Canada is not interested in supporting its surge. Canadian manufacturers have suffered enough. The next step is for bond yields to go down, along with fixed mortgage rates. However, this will not happen as fast or as much as compared to variable mortgage rates.

For example, major Canadian banks have slashed their posted 5- year fixed mortgage rates from 6.95% to 6.6%, while 1-year fixed rates went down from 6.6% to 6.4%. In contrast, prime is currently still at 6.0%. With my one percent off prime variable rate, I paid interest of five percent on my first October mortgage payment.

There is one more thing to consider: Yield of 5-year government bonds dropped 60 basis points. In comparison, mortgage rates went through a 35 basis points reduction. It looks like there is still room for mortgages to go down.

Typically, this spread between bond yields and mortgage rates is more or less constant. If one dropped 60 basis points, chances are, so did the other, and vice versa. This time around, however, the spread has widened, with bond yields taking the lead. This is actually unusual, but spells good news for homeowners who can expect owning their homes to be less expensive in the months to come.