Where are mortgage rates heading?  

The Bank of Canada is looking carefully at their key banks rates, and what they do could decided what your mortgage rates will be in the future.

Bank of Canada’s second in command says Canadian interest rates will likely peak at lower levels than they have in the past, – and the central bank might keep rates low even once the economy has returned to full throttle.  This bods well for moratge rates over the short to medium term. 

Senior Deputy Governor Carolyn Wilkins told a luncheon audience in Toronto’s financial district that the country’s “neutral” interest rate – the level that would sustain the economy at full capacity and keep inflation in line with the central bank’s 2-per-cent target, which functionally implies an upper range for the bank’s key policy rate – is now likely “3 to 4 per cent,” roughly 1.5 percentage points below its historical norm, meaing most likely the rates that banks charge to customers for mortages will remain below historical standards and keeping housing prices going in the right direction. 

To read an indpeth report, please go to the Globe & Mail.