New Mortgage Rates and Information; October 15th
Here is a statement from the Gibbard Hoffart Financial Group, our "go to" advisors for all things mortgage related. For more specifics on what all the rates are right now, please check out my Web Page: http://tinyurl.com/24oje6v
Variable-Rate Mortgage Forecast
Most analysts now expect the Bank of Canada to remain on the sidelines until 2nd quarter 2011. On average, major economists now predict a 100 basis point increase in the overnight rate over the next 15 months. Their outlooks, if accurate, imply a 4.00% prime rate by December 31, 2011. Prime rate is currently 3.00% and the 10-year average of prime is 4.50%.
Based on a 75-basis-point discount from prime, these forecasts suggests 5-year variable rates in the 3.25% range by year-end 2011.
Fixed-Rate Mortgage Forecast
Banks foresee 5-year bond yields climbing 117 basis points in the same 15-month timeframe. That would put the 5-year yield at 3.41% by the end of next year. The 10-year average of the five-year yield is 3.93%.
Assuming a typical 120 basis point spread above yields, these forecasts suggest deep-discounted 5-year fixed rates could rise to roughly 4.24% by year-end 2011.