Despite the rapid run-up in the 5 year mortgage rate during the past 2 weeks, the major banks are predicting relatively stable rates for the next 18 months.  TD, RBC, CIBC and BMO are predicting the prime to stay where it is until the 3rd Quarter of 2010.  These banks also predicted that Canada bond rates will rise between 1/4% to 0.88% between now and the 3rd Quarter of 2010.  Fixed rate mortgages normally follow rates for Canada bonds.

National Bank was the lone disenter.  They are forecasting the prime rate to increase by 1/4% by the end of 2009 (despited the Bank of Canada’s announcement to hold rates until the 3rd Quarter of 2010).   By the end of 2010, they expect the prime rate would have increased by 2.25%.

• TD forecasts the prime rising 3rd quarter 2010.  The 5 year Canada Bonds yields are seen to rise by 0.75% by the Q3 of 2010 – TD Quarterly Economic Forecast dated June 16, 2009 (Page 9)
• RBC Financial Market Forecasts the prime rate rising in the 3rd quarter 2010 by 1/2 percent.  They also are forecasting an increase of the 5 year Canada Bond from 2.25% – 2.60% over the same period – RBC Financial Market Forecast dated June 15, 2009
• CIBC World Markets predicts no increase in the prime rate increase for 2009 and 2010.  They also forecast a marginal increase in the 10 year Canada Bond rate by 0.26% between now and the 3rd Quarter of 2010 -  CIBC StrategEcon dated June 18, 2009
• BMO Nesbitt Burns expects the prime to start rising by the 3rd quarter 2010.  Between now and the 3rd Quarter of 2010, they forecast the 10 year rate to rise by 0.88% – BMO Focus dated June 19, 2010 (Page 9)
• National Bank June 2009 Economic Monitor forecasts an early increase in the prime rate.   By the end of 2009 and 2010, they expect the prime to rise by 1/4 % and 2.25%, respectively.  Fixed rates will also rise rapidly by 1/2% by the end of 2009 and 1.5% by the end of 2010 – National Bank’s Monthly Economic Monitor for June 2009

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