Canadian 1-Year and 5-Year Mortgage Rate Forecast for 2011-2012

Canadian 1-Year and 5-Year Mortgage Rate Forecast for 2011-2012
By Kris Cyganiak–

Canadian 1-year fixed mortgage rates could increase to 4.35% by end of 2011 and rise further to 5.40% by the end of next year according to a recent BCREA report that also forecasts that 5-year mortgage rates could end 2011 at 5.90% and increase further to 6.55% by the end of 2012

The British Columbia Real Estate Association (BCREA) Mortgage Rate Forecast report released in March 2011 indicates that, “Mortgage rates have thus far evolved in-line with our December 2010 forecast, with the 5-year fixed rate reaching 5.44% and the 1-year rate hitting 3.50% in mid–February.”

Citing improved economic outlook that is putting upward pressure on rates, the report states that recent geo-political risk has threatened recent optimism but mortgage rates will slowly get back to “normal” which will lead to higher rates in 2011 and 2012.

The report anticipates that, “barring a growth depressing and sustained rise in oil prices, yields will move gradually higher throughout the year as markets price in improving economic conditions and higher inflation expectations.” Rising yields will in turn lead to higher mortgage rates.