Mortgage rates have stabilized for the time being with latest economic news in Canada regarding stalled oil pipelines and cutbacks, automobile plant closure, and NAFTA2 uncertainties. Bank of Canada held its influential overnight rate constant yesterday at 1.75% and a January hike still looks very unlikely, but the Governor also reiterated that they expected rates to move back to the neutral range. We expect the next rate hike to occur in March 2019, and we continue to look for Bank to eventually finish this cycle at 2.50% up from the current 1.75%. That would put the 5 year fixed mortgage rate in 4.5% range. How long that will take is still the magic question. The graphic above is the 5 year bond, and the 5 year mortgage rate is typically priced at about 1.5% above the bond. As you can see, pressure to increase rates further is off and we are starting to see specials, for example 3.49% for 5 year fixed CMHC-insured purchase.
Below are notional mortgage rates. Rates depend on many factors these days. Payment factor per $100K borrowed at 25 years amortization is currently about $510/month.
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