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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?

December 2014 Overall Summary

Holiday home shoppers have plenty of reason to be merry as festive fixed and variable-rate pricing will remain throughout the winter season. Low bond yields have yet to prompt movement within fixed rates, while the Bank of Canada will stick to stimulus measures amid oil's big decline.

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Low bond yields have persisted since the autumn, offering no economic incentive for lenders to hike their fixed rates. It's anticipated that these discounts will last throughout the holiday season - and will be sure to make homebuyers and renewers quite jolly.

It looked for a time like Canada's economy would recover sufficiently by 2015, paving the way for a central rate raise. However, oil's recent drop means our nation could face a very different economic reality. This, combined with lingering high household debt levels, will prompt the Bank to stick with current stimulus measures, perhaps even later than the speculated Spring 2015 timeline.

This Month's Panelists

Dan Eisner - President, True North Mortgage

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Bond yields have been flat as of late and as a result, I expect mortgage rates to stay steady for the next few days and weeks. Santa Claus won't be bringing us lower mortgage rates.

The new, lower oil prices will reduce inflation pressures and have a negative effect on the value of our currency thus greatly reducing the likelihood that the Bank of Canada will mess with the Prime rate.

Will Dunning - Chief Economist, Mortgage Professionals Canada

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For more than six years we have heard cautions about an "inevitable" rise in mortgage interest rates. We're still waiting for the "inevitable". That said, economic conditions are gradually strengthening. And, while the main driver of growth in Canada and the U.S. has been housing activity, we are finally starting to see signs of sustained improvement in the manufacturing sector. This broadening of economic recovery may finally be creating conditions that will support some rises in interest rates. But those rises should be expected to be very gradual. Rates for five-year mortgages might rise by a half point during the coming year and a half.

The outlook has not changed. The Bank of Canada and the U.S. Federal Reserve continue to signal that they will not be raising their administered rates anytime soon, which means that interest costs for variable rate mortgages rates should change very little during the coming year. Analysts continue to expect that any rises for these administered rates might start about mid-2015.

Dr. Ian Lee - Program Director, Carleton University

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The five-year Government of Canada yield has been dancing around a very narrow band of roughly 1.2 per cent to 1.4 per cent. This movement does not suggest a change in fixed rates in the near future.

The latest economic signals continue to be "blooming, buzzing confusion" for they are mixed and contradictory. For example, U.S. growth is galloping with 321,000 jobs created last month – yet Canada lost 10,700 jobs. Inflation is up but oil and the loonie experienced very recent substantial declines. The output gap in the Canadian economy is declining and yet there remains significant slack in the system. The OECD claims the Bank of Canada will raise interest rates in May while the IMF warned against increasing rates too quickly and the BoC is somewhere in between. This all reminds of President Truman's exasperated response when yet another economist said to him, "on the hand this is going to happen but on the other hand maybe not". To which he replied, "can someone please find me a one handed economist?". I remain of the view that the BoC will not increase interest rates before fall 2015.

Kelvin Mangaroo - President of RateSupermarket.ca

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Bond yields have stayed within a very narrow spread this month, prompting no incentive for lenders to hike fixed rates from their current discounts. Winter home buyers and rate renewers will continue to enjoy low rates throughout the holiday season.

Recent reports from a multitude of economic sources pointing to a 2015 central rate rise may be trumped by oil's slump; Bank of Canada Governor Stephen Poloz has stated that the price decline will cut 2015's economic growth by one third of a per cent. It's likely the Bank will adhere to its "wait-and-see approach" with no change to variable rates in the foreseeable future.