Mortgage rates will be rising sooner than we think according to TD Bank.
While the Bank of Canada is expected to keep their overnight rate steady until sometime in 2017, TD sees the 5 year government bond yield going up by anywhere from 60 to 70 basis points by the end of 2016. That in turn could be passed through to consumers in terms of higher 5-year fixed mortgage rates of a similar increase. Mortgage rates could begin rising as early as next month.
What would that mean for Calgary? Diana Petramala, economist at TD Bank explains:
“Calgary is going through a bit of a correction right now, so higher interest rates are only going to deepen that correction.
Home prices are already down by almost 4%, and we do think that we could see sales and prices fall further through 2016 and 2017.
We’re betting on maybe a 10% peak-to-trough in home prices in Alberta overall; a large amount of it’s being concentrated in Calgary right now.”