“According to CMHC’s base case scenario for 2014, the average for the one-year posted mortgage rate is forecast to be within 3.0 per cent to 3.50 per cent, while the average for the five-year posted mortgage rate is anticipated to be within 5.25 per cent to 5.75 per cent,” CMHC states in its first quarter 2014 housing outlook.
And while interest rates are expected to eventually climb, the crown corporation believes low rates will allow the housing market to continue to thrive.
“Consistent with a somewhat higher economic growth prospect, interest rates are forecast to register gradual and modest increases by the end of the forecast horizon, ultimately leading to a slight increase in mortgage rates,” the report states. “Nevertheless, this interest rate outlook will continue to support housing market activity over the forecast horizon, as mortgage rates will remain low by historical standards.”
However, next year will see a slight spike in interest rates, with 2015’s average five-year fixed rate expected to hover between five and six per cent.
"For 2015, the average for the one-year posted mortgage rate is expected to rise and be in the 3.75 per cent to 4.25 per cent range," the report states. "While the average for the five-year posted mortgage rate is forecast to be within 5.50 per cent to 6.25 per cent."
The Canadian Mortgage and Housing Corporation is forecasting fixed-interest rates increases in 2014, though brokers can breathe a sigh of relief as rates are still expected to remain historically low.