The answer to that question, depends on where you look. Most experts look at the economic indicators to give them some direction.  The data tells them, we are far from a recovery.  Canada is still facing job losses and a sluggish economy.  In the past, before raising interest rates, the Bank of Canada will wait for the gap to narrow between current GDP and GDP if the economy were at full capacity.  Also for unemployment figures to stabilize.  

Most economists believe rates will increase 2 - 2.5% over the next 5 years.  But the forecast, is for rates to remain relatively flat, for the next twelve months.  The Bank of Canada has held rates unchanged for the last 16 months and most economists believe we won’t see a change until 2013.

Last week, BMO came out with a special five year rate at 2.99%.  This lead its competitors to match rates.  The rate is a fantastic deal but comes with some restrictions in repayment and available amortizations etc.  This drop in rates has spurred other lenders to drop their longer term rates, such as the 7 and 10 year terms to under 4%.  What should a home owner do with rates this low?

If you assume that mortgage rates increase by 2% in the next 5 years, then it is far better to pay a little higher rate now and look at a 10 year term.  This will provide stability over the long term and also increase your equity.  For those who are currently maxed out on other expenses, this could be a winning strategy in the long run.  We have a calculator, which will analyse and provide some guidance on exactly which product is right for you.  Please call for a free consultation with no obligation (250-862-1806 Laurie or Scott).