One of the most common questions we receive is where are rates going, here is the rate outlook on both fixed and variable rates over the next month.
It’s incredible how much can change in a few short weeks, with the strong job numbers and oil reaching over $60USD a barrel things are looking up for the Canadian economy.
Senior deputy governor Carolyn Wilkins said, “while the economic outlook is expected to warrant higher interest rates over time, some continued monetary policy accommodation will likely be needed to keep the economy operating close to potential and inflation on target.” This can be summed up in one word “Trump” and what he will do with NAFTA.
The Bank of Canada announced on January 17th that they were increasing the Bank of Canada rate by 0.25% to 1.25% and all the major banks quickly followed by raising their prime rates to 3.45%. The market is pricing in another increase in the next few months and from their comments its clear that variable rates are heading higher over the next 90 days, but should remain stable for the next 30 days.
Based on the December job report, bond yields have increased over the past 30 days and 5 year fixed rates have increased between 15bp and 25bp. There should not be much more movement until there is some news, either good or bad to move the chart. The status of the NAFTA talks will be the main driver of any change in yields over the next few months. 5 year fixed insured (less than 20% down) can found for as low as 2.99%.
Shawn Stillman, CPA, CA
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