Canadian mortgage rates are likely to stay at their current low levels well into 2011, giving homeowners considering refinancing their mortgages, or first time home purchasers, time to make informed decisions about their home mortgage options.
In what they describe as “the most bullish rates forecasts on the street,” Scotiabank Economic analysts predict that further Bank of Canada rate hikes will be on hold until the third quarter of 2011. (In three successive moves so far this year, the Bank of Canada raised its market-setting interest rate by 25 basis points, so that it now stands at an even 1.0 percent. The next Bank of Canada rates announcement is scheduled for October 18.)
In a revised bank of Canada rates forecast, released October 8, Scotiabank economists project that “the global push toward a further round of quantitative easing and downsides to U.S. growth prospects [will] force the BoC’s hand away from continued rate hikes likely until at least next summer.” (And, in fact, such further monetary easing is already evident, as the U.S. Federal Reserve has already announced they will utilize an additional one trillion newly printed $US to purchase treasuries and other assets, perhaps mortgages, held by major banks.)
Scotiabank analysts, meanwhile, forecast that the Bank of Canada’s overnight lending rate will reach 1.75 percent by the end of 2011, “following three quarter pint hikes in September, October and December [of 2011].” A pause in further rate hikes should give Canadian consumers a significant window to review their home mortgage and refinancing options.
