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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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Fall borrowers should take advantage of today's pre-approvals and rate holds; fixed mortgage rates are expected to tick slightly higher this season. However, any rise will be gradual, and Canada's lending landscape will remain ultra-competitive throughout November.

Variable borrowers can expect stability as no movement is anticipated in the upcoming December Bank of Canada interest rate announcement.

Fixed Rates - Up Variable Rates - Unchanged

Expect to see slightly higher fixed rates this season as lenders adjust their once-rock-bottom discounts in response to growing funding costs. This occurs as Government of Canada bond yields, which set the pricing for fixed rates in Canada, rise in anticipation of a U.S. rate hike. The rise is also the result of investor reaction to the new Liberal government's three-year deficit mandate, which will rely heavily on national debt for increased infrastructure investment.

Despite rumblings of a rise south to the border, Canada's central bank is expected to remain pat until well into 2016, supporting post-recession economic growth with low variable interest rates.

This Month's Panelists

Dan Eisner


True North Mortgage

Fixed Rates - Up Variable Rates - Unchanged

Fixed mortgage rates may move up in the coming weeks, but only slightly. The bond market lacks any real direction.

Given the very low rate of inflation we are seeing in the Canadian economy, there is a more likely chance of a prime rate decrease rather than a prime rate increase.

Dr. Ian Lee

Program Director,

Carleton University

Fixed Rates - Unchanged Variable Rates - Unchanged

As noted in the last two Mortgage Rate Outlook analyses, the Bank of Canada 3-year-to-5-year bond yield has been remarkably stable, moving in a very small band between 0.5 and 0.7 per cent since January 2015. It is for this reason that I do not expect to see any changes in the next 30 days in the fixed mortgage rate.

The Bank of Canada Monetary Policy Report and press conference was important and revealing. The Governor and Deputy Governor noted that the economy is recovering in the non-resource sector. Nonetheless, the decline in oil and commodity prices have generally reduced the terms of trade for Canada and, more importantly, have led to draconian cuts to resource sector capital budgets (which are about 1/3 of total capital expenditures in Canada). This has led to a further reduction in the growth forecast. But the insurance against a rate increase is provided by the increasing recognition that the Federal Reserve will increase its rate in December, which will increase the gap between the U.S. and Canada, putting further downward pressure on the loonie. For these reasons, it is less and less likely that we will see a Bank of Canada rate increase anytime soon.

Will Dunning

Chief Economist,

Mortgage Professionals Canada

Fixed Rates - Up Variable Rates - Unchanged

Since the start of July, yields for 5-year Government of Canada bonds have been relatively stable (most days in a range from 0.75 per cent to 0.9 per cent). Correspondingly, rates for 5-year fixed rate mortgages have also been relatively stable, with just minor tweaks to special-offer rates. This stability is consistent with the current lukewarm economic environment: employment growth is at about the same rate as population growth, which, to this economist, is the essence of stability. That said, consumers are not yet spending their budgetary windfalls (courtesy of the plunge in the price of gasoline). I expect that in the coming months, they will gradually loosen their purse strings, and we will see very gradual economic improvement. Also, the weakened Canadian dollar is slowly – oh, so very slowly – delivering some economic benefits. Thus, I am still saying that the next significant move in bond yields will be upwards, but it should be very gradual. The Canadian (and U.S.) economy is not able to tolerate large rises in interest rates. Modest rises in bond yields will put modest pressure on funding costs for Canadian fixed rate mortgages. In short, I still expect that 5-year rates at or below 3.0 per cent will still be widely available during the coming six months.

As was widely expected, the Bank of Canada did not reduce its official rate (the "Overnight Rate") at its October 21 meeting. The next meeting date is December 2, and before that time there are unlikely to be any big movements in key economic indicators. Overall, I expect that the Bank will stand pat for its December 2nd meeting (and probably January 20th as well) . We are unlikely to see any further changes (rises or drops) for the overnight rate, prime rates, or variable mortgages until well into 2016.