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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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Our experts are split on mortgage rates in October.

Fixed Rates - Unchanged Variable Rates - Down

The Canadian economy is performing well enough, but it's not in overdrive by any means. Moreover, the same volatility and trade uncertainty that existed in September prevails in October. That makes it unlikely, barring a major trade announcement, that rates will make any major moves in the next month. Expect more sideways movement for 5-year yields and 5-year fixed rates, for at least a little while longer.

Once again, our panel is split. If you're of the opinion that Canadian rates could follow U.S. rates lower (since the Fed is on a cutting path), then it seems more likely we'll see a decrease in Canada's prime rate before an increase. For the next month, however, variable mortgage rates are very likely in a holding pattern. Given floating rates are above many fixed rates, they remain highly unpopular—despite record variable-rate discounts versus prime rate.

This Month's Panelists

Will Dunning

Chief Economist,

Mortgage Professionals Canada

Fixed Rates - Unchanged Variable Rates - Unchanged

GDP in Canada has increased by 1.3% during the past year, which more or less matches population growth. Meanwhile, concerns are rising in many other countries, which has caused bond yields to fall around the world during this year. Reductions have not been as large in Canada compared to other countries because of our comparatively stronger economy. Correspondingly, our mortgage interest rates are quite low. The outlook for economies and interest rates remains highly uncertain. Recent movements in interest rates and fears about economies are related to reckless economic policies and increasingly dysfunctional politics in the US. Brexit confusion is also an important negative factor.

Evolving conditions within Canada are supportive of the "no change" attitude from the Bank of Canada. Yet, there is certainly the risk that impacts from events in other countries will impair our economy. Even if we see some signs of economic weakening in Canada in the coming months, it would take some time for the Bank of Canada to change its opinion that its benchmark rate is at the right level.

Any change in variable rates would therefore have to be due to changes in the discounts (versus their prime rates) that lenders offer. These discounts are already larger than average (reflecting that the lending environment has become quite competitive). Therefore, it is unlikely that there will be further reductions. Is there a chance that variable rates could rise? Housing activity has improved during the past few months, but is still below average. Therefore, continued competition should prevent rises in these rates.

Dan Eisner


True North Mortgage

Fixed Rates - Down Variable Rates - Down

It has been a turbulent few days in the financial markets. The trade talks between the US and China seem to be following the pattern of two steps forward and one step back. This has caused bond yields to fluctuate radically. That being said, I would expect that we will see a small decrease in fixed rates over the next week.

A prime rate decrease is coming. The big question is when. One thing is certain, variable rates are not popular right now. We are seeing 93 percent of our clients choose a fixed rate over a variable rate.