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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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Looking to buy a home in the off-season? The approach of the holidays may slow buyers' voracious real estate appetites, but this summer's sizzling rates are expected to stick around. A consistent bond market leads the way for low fixed rate offerings, while the Bank of Canada is expected to sit tight on the variable cost of borrowing this month.

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Mortgage season is beginning to slow and with it, lenders' competitive practices - but that doesn't mean fixed rates are in for a hike. Non-action from the U.S. Federal Reserve has left Canadian bond yields within a very tight range, meaning lenders can continue to offer this seasons' great discounts. Buyers will still access historically low rates for their mortgages over the coming month.

Canada may have experienced a recession in the first half of the year, leading the Bank of Canada to cut interest rates twice since January. While there's been plenty of speculation over this month's move, new positive data could mean they can afford to hold off on further cuts for the time being. Combined with a persistently low loonie, it's not anticipated that there will be any change made to variable mortgage rates this month.

This Month's Panelists

Dan Eisner


True North Mortgage

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Like my son in front of the computer, mortgage rates aren't going anywhere. Canadian government bond yields continue to trade in a tight range which would suggest no fixed mortgage rate changes to come.

Given the deflationary pressure from lower commodity pricing and the continued weakened position of oil, we won't see prime rate increasing for some time. The lowered Canadian dollar will do a better job at stimulating the economy than another rate drop in any case.

Will Dunning

Chief Economist,

Mortgage Professionals Canada

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Seven years ago, former Bank of Canada Governor Mark Carney famously said "in the current environment the Bank's projections – and those of all forecasters – are subject to an unusually high degree of uncertainty." I have always found this is a curious statement. First of all, what's the difference between "a normal degree of uncertainty", versus "a high degree of uncertainty", versus "an unusually high degree of uncertainty"? Secondly, and more fundamentally, since economic forecasts are always wrong, shouldn't we say that the level of uncertainty about forecasts never changes – it's always 100%? How can the degree of uncertainty get any higher than that? But I digress.
My opinions on the outlook for mortgage interest rates have not changed by very much. Bond yields in the U.S. and Canada have dropped during the past three months in response to international events. But, U.S. economic indicators remain strong enough that before much longer government bond yields will start to creep upwards. This will put some pressure on funding costs for Canadian fixed rate mortgages. For Canada, on the other hand, the economic outlook is less favorable than in the U.S. (the negative effects of reduced oil prices are still not fully played–out; meanwhile, the positive effects will take longer to materialize). Therefore, Canadian rates will probably increase by less than in the U.S. In any case, our economies are not able to tolerate large rises in interest rates and consequently rates for 5-year fixed rate mortgages are likely to increase only slightly during the coming months. I expect that 5-year rates at or below 3.0% will still be widely during the coming 6 months.

Will they move again? The Bank of Canada has reduced its official rate (the "Overnight Rate") twice this year (on January 21 and July 15). Recent economic signals have been viewed positively (especially including the rises in GDP seen for June and July). There may be some weaker statistics in advance of the next meeting date (October 21), such as a drop in resale activity for September (that data will be released by the Canadian Real Estate Association about October 15). Overall, I expect that the Bank will stand pat for its October meeting. We are unlikely to see any further changes (rises or drops) for the overnight rate, prime rates, or variable mortgages until well into 2016.

Dr. Ian Lee

Program Director,

Carleton University

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The Bank of Canada 3-year to 5-year bond yield has moved within a very narrow range of0.5 and 0.7 since January 2015. This stability suggests it is unlikely that we will see any changes in the next 30 days.

I have consistently argued that Canada was not in a recession – technical or otherwise – in the first half of 2015. Indeed, the latest GDP, exports and jobs growth numbers show steady improvement in the Canadian economy. Moreover, it seems increasingly clear the Canadian economy has turned the corner in absorbing the oil price shock from the last year. For example, as former Stats Can Deputy Phillip Cross notes, the cumulative growth in GDP in the last two months is 0.7% which is 4% GDP growth on an annualized basis. This sizzling growth rate was led by automobile production and exports. Moreover, the U.S. Federal Reserve is hinting at a rate increase before the end of the year which would place further downward pressure on the loonie. These positive key statistical metrics in Canada and the expected Fed Reserve move make it most unlikely that Canada's Governor Poloz will change the central bank rate before the end of this year.

Kelvin Mangaroo

President of RateSupermarket.ca,

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Despite sunnier economic news south of the border, the U.S. Federal Reserve did not hike their trend-setting interest rate last month. That translates to little change for the Canadian bond market and, as a result, Canadian fixed mortgage rates.

The Bank of Canada has tweaked rates twice this year in response to worsening economic data, and there has been speculation that they'd make a third this month. However, they'll likely be saved from taking any action by the weak loonie, which has proven stimulative enough to give exports a much-needed boost. I don't anticipate any change for the variable cost of borrowing this month.