Canadian mortgage rates have continued 2017’s upward trend. The five-year qualifying rate for insured mortgages bumped up 15 basis points to 5.14 per cent while discounted rates oﬀered by lenders increased similarly to 3.39 per cent. The increases were driven by the earlier than expected rate increase by the Bank of Canada in January. The Bank has now raised interest rates three times since last summer, with its key policy rate sitting at 1.25 per cent.
We are forecasting the Bank of Canada will follow up its January rate increase with at least one more rate increase in 2018. However, it will likely hold oﬀ until later in the year so policymakers can properly assess the impact not only of its own tightening over the past year, but also the impact of newly implemented B-20 guidelines on mortgage qualification rules and the heightened risk to Canadian exports from US trade policy