Rates Flat Till 2011?

Here are some of the more notable interest rate and housing-related headlines from the past week:

• Central banks signal low rates here to stay
• Recession may be over but growth will be limited next year: CIBC
• Worst is Over for Housing Market, Economists Say

Among the takeaways…

• CIBC economist, Avery Shenfeld, proclaims: “Canada's inflation rate will be no threat to the Bank easily fulfilling its pledge to keep interest rates at a slim quarter point through mid-2010. In fact, market expectations for rate hikes in the first half of 2010 could be a full year too premature.”
• Bank of America Securities-Merrill Lynch says it does not expect the Bank of Canada to begin raising rates until 2011.
• National Bank economist, Marc Pinsonneault, believes mortgage rates won’t rise over the next 12 month by more than 50 to 75 basis points from today’s 5.85% five-year fixed posted rates.

On the housing front…

• TD economist, Don Drummond, says: “A similar pattern in [the US and Canada] is unmistakably suggesting we’ve not only bottomed in housing, but we’re on the way back up.”
• BMO Capital Markets economist, Jennifer Lee, agrees, saying: “The housing market has clearly turned the corner.”

As usual, long-range forecasts are fraught with hazards, so the above should be placed under the “For what it’s worth” heading…