Canada’s big banks lowered the typical 5-year posted bank rate by 0.05% on Monday.  It currently stands at 6.45%.  (Of course, mortgage brokers will offer you a lot better than 6.45%)

The CMHC now predicts 5-year mortgage rates will drop to 6.4% by the 2nd quarter of 2007, and then rise again in the 4th quarter (Source: Globe and Mail). 

This essentially suggests that rates will remain unchanged for a while.  We’d be surprised if rates remained this static, but guessing the direction of interest rates is like flipping a coin.

By the way, if you’ve ever wondered how well professional economists can predict mortgage rates, here’s a good article.  Studies have repeatedly shown that your average red headed woodpecker forecasts interest rates better than the typical economist.