Mortgage rates are trending higher and the prime rate will hit 3.85% in the last three months of 2018.
That’s the view of economists at British Columbia Real Estate Association who have just published their Q4 Mortgage Rate Forecast.
Pointing to the slowdown in mortgage growth following the introduction of the stress test at the start of the year, BCREA Economics says that the combination of lower access to credit and rising interest rates has led to a significant tightening of the market.
Monetary policy is also tightening and BCREA says that, while the 5-year qualifying rate for mortgages held fairly steady in Q3, the BoC’s actions will likely lead to higher rates.
Although there are some solid reasons why the BoC could speed up its normalization of interest rates – including employment and inflation data – BCREA believes that if the economy is reaching the end of the current business cycle, the cautious increases will endure.
It forecasts the bank will increase its overnight rate to 1.75% in October, with a possible further increase in December, and more to come in 2019.
Source: https://www.canadianrealestatemagazine.ca/market-update/higher-mortgage-rates-forecast-for-fourth-quarter-248034.aspx
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