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Long-Term Mortgage Rate Forecast

Here are the latest long-term interest rate forecasts from Canada’s major banks.

Overnight Rate Forecast

Bank 2010 2011
BMO 1.35 3.35
CIBC 1.25 2.50
RBC 1.50 3.50
Scotia 1.50 3.00
TD   1.50   3.50  
Avg 1.42 3.17
Chg 1.17 2.92

5-Year Government Bond Yield Forecast

Bank 2010 2011
BMO 3.60 4.30
RBC 3.45 4.10
Scotia 3.80 3.95
TD   3.50   4.30  
Avg 3.59 4.16
Chg 0.62 1.19


Big bank economists, on average, are forecasting a 2.92% increase in the overnight rate in the next 19 months.  Their forecasts, if accurate, suggest that prime rate will rise to roughly 5.25% from its current 2.25%.

On the fixed-rate side, bond yields are expected to rise 1.19% in the same timeframe, according to bank estimates. (Bond yields drive fixed mortgage rates). Based on a typical 120 basis point spread above yields, this suggests deep-discounted 5-year fixed rates could rise to around 5.36% by year-end 2011.


Things To Note:  These forecasts are made by the banks and are subject to frequent change. This data is provided only for general interest.  Always discuss your needs and risk tolerance with a mortgage professional before acting on any information you read online. History has shown that it’s near impossible to accurately predict interest rates long-term so use these figures at your own risk. That said, while economist projections are often wrong, they are still one of the best sources of educated opinion on interest rates.

“Chg” = The expected change in rates from today. In other words, Chg is the average forecast minus today’s rates. All forecasts are based on the respective year-end.

Source:  BMO, CIBC, RBC, Scotia, TD  (CIBC’s 5-year bond forecast was not available at the time this was posted.)