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Mortgage Rate Outlook Panel

Our panel of mortgage experts share their views on Canadian mortgage rate trends each month by answering this question: What is your outlook for Canadian mortgage rates over the next 30-45 days?

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June 2019 Overall Summary

The panel is all on the same page this month, more or less. Fixed rates are predicted to decrease over the next 30 days since five-year Government of Canada bond yields have declined in 2019, and will likely continue to decline. As a result, bond markets are trending downward.

And though Canada's economy seems to be doing well, we are being impacted due to tariff policies and talk of trade wars between the U.S. and Mexico, causing fear in the economy and bringing down interest rates.

On the other hand, variable rates will likely remain stable as the Bank of Canada gave no indication at the last interest rate announcement that it is looking to change the overnight rate anytime soon. So much is happening in the economy and the Central Bank is likely erring on the side of caution and just observing before making a move. As such, discounts on Prime will likely stay the same, though one panelist sees variable rates decreasing by a half-point before the end of the year due to some weakened economic factors.

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This Month's Panelists

Dan Eisner - President, True North Mortgage

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Donald Trump started a trade war with Mexico, and Canadian fixed mortgage rates fell. So, for me to know where mortgage rates are headed next would require me to predict Trump's next move – a task I am not equipped to handle. Mortgage rates will either trend up or down but, just like Trump, they won't be standing still.

Inflation remains tepid, and the Central Bank remains cautious. The possibility of a prime rate change in either direction is remote. We won't likely see a change in the discount off of Prime offered to clients anytime soon.

Dr. Ian Lee - Program Director, Carleton University

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Donald Trump started a trade war with Mexico, and Canadian fixed mortgage rates fell. So, for me to know where mortgage rates are headed next would require me to predict Trump's next move – a task I am not equipped to handle. Mortgage rates will either trend up or down but, just like Trump, they won't be standing still.

The April MPR followed by comments from Governor Poloz and Deputy Governor Wilkins did not suggest or indicate any imminent central rate hikes are imminent. This is due to very mixed signals in the Canadian and international economy.

Will Dunning - Chief Economist, Mortgage Professionals Canada

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Reckless announcements about trade and tariff policies are causing havoc. Fears about the impact on the economy are escalating, which has subsequently brought interest rates down. Since I wrote my commentary five weeks ago on the matter, the yield for five-year Government of Canada bonds has fallen by 0.3 points. Mortgage interest rates haven't yet followed this move, and therefore, there could be a further small drop in five-year fixed mortgage rates.

That being said, interest rates are probably lower now than they should be, given that economic fundamentals are still in decent shape. If sensible economic policies were being followed in the U.S., there probably would be less fear and interest rates would be higher. But at this point, anything could happen.

Also, mortgage stress tests are likely going to have bigger economic consequences than most people expect. I discuss this in a new report for Mortgage Professionals Canada (see pages 10 to 15). This will tend to restrain interest rates over the next two to three years.

The Bank of Canada is unlikely to change its key interest rate during the next few months, and therefore, variable mortgage rates are unlikely to change in the near term. But economic trends are likely to weaken due to the tariff war emanating from the U.S. and the policy-induced housing contraction in Canada. I expect that by the end of the year, the BoC benchmark will be one-half point lower.