Variable Mortgage Rate Forecast – November 2013

Variable mortgage rates don’t appear to be going anywhere for at least the next 2 years.  And for the first time in 3 years there’s an equal possibility that the next variable rate change will be either up or down.  This change in the forecast for variable rates has more to do with the new Bank of Canada (BOC) governor, Stephen Poloz, than it does with a change in market condition.

Mark Carney, the previous BOC governor held the overnight rate and by extension the prime lending rate in a holding pattern acknowledging that the economy needed the stimulus.  The difference being that Mark Carney used his rate announcement dates as a platform to discourage consumer borrowing.  While the cause was noble, the medium was inappropriate.

Under the direction of Stephen Poloz, the rate announcement press release is simply that, accompanied by the rationale in the form of current and forecast conditions.  The forecast released in their last announcement makes it clear that low inflation and economic slack will persist until the end of 2015, and that no increase in the variable interest rate is predicted until then.


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