Interest Rate Forecast

There have been some updates to interest rate forecasts since our last review of rates in December. The overall trend is upward but there are differing opinions as to how high rates will rise.

Variable and Adjustable Mortgage Rates

Variable and adjustable mortgage rates are closely related to the Bank Rate (the rate at which banks can borrow from the Bank of Canada).

CIBC raised their Bank Rate forecast for the end of 2019 to 2.00%. Up until now, CIBC was the lone forecaster projecting a 1.75% Bank Rate in two years. Of the 8 forecasters we track, 2 expect the Bank Rate to reach 2.50% and 4 expect it to reach 2.25%.

Expect variable and adjustable mortgage rates to rise another 1/2% in 2018, and 1/2% in 2019.

2018 03 05 BoC Bank Rate Forecast.jpg

5-year Fixed Mortgage Rate

5-year government bonds and 5-year mortgage rates move together so one is a good guide for the other.

Desjardins economics made a dramatic change to their forecast of 5-year government bond rates while others made only minor adjustments to their forecasts. Desjardins had forecast a steep rise in the 5-year rate in 2018, but has now moderated their forecast and fallen in line with the predictions made by the large Canadian Banks. Still, RBC Royal Bank predicts almost a full 1% increase in the 5-year rate by the end of 2018.

2018 03 05 GoC 5-yr Bond Forecast.jpg

Expect 5-year mortgage rates to continue to rise over the next 2 years, Our advice is to speak to a Mortgage Broker as early as possible to lock in a rate. You can lock in a rate 120 days before your mortgage is up for renewal.

2018 03 05 Mortgage Rate Forecast.jpg
Do you know all the costs of buying a home?

Do you know all the costs of buying a home?

What you need to know about Private Lenders

What you need to know about Private Lenders