BC Real Estate Association’s Mortgage Rate Forecast

BC Real Estate Association’s December 11th Mortgage Rate Forecast Report predicts the Bank of Canada prime rate is likely to remain flat through to the end of this year and throughout 2020. The average five-year fixed rate is expected to increase incrementally in the first and second quarters, then stay level at 2.95 per cent through the remainder of 2020.

An interesting question they ask is why the Bank of Canada (BOC) is so intent on remaining firm on keeping interest rates steady with so many central banks around the world lowering their policy rates?

BOC reports reflect great concern that lower interest rates would spur a greater accumulation of household debt, which the BOC believes is a greater risk to the Canadian economy than deteriorating global economic conditions. Canadian policymakers have committed to “bending the curve” on the Canadian household debt-to-income ratio, through a combination of higher interest rates and stricter mortgage policy. Balanced against the goal of restraining debt, the BOC sees the risk of further disruption in global trade as manageable.

View full report: https://bcrea.bc.ca/wp-con…/uploads/mortgagerateforecast.pdf