Canadian Banks Release Interest Rate Predictions

Alyssa Furtado
by Alyssa Furtado August 30, 2010 / No Comments

Canada’s Big 5 banks recently released their interest rate forecasts. Their projections are summarized as follows.

Projections in the Overnight Rate (All number are in percentage points and are rounded to the nearest 1/4 point)

Bank 2010 2011
BMO 1.00 2.50
CIBC 1.00 2.00
RBC 1.25 2.75
Scotia 1.00 2.25
TD 1.00 2.00
Average 1.00 2.25


The 2010 forecast represents a change of +25 basis points from the current overnight rate of 0.75%, while the 2011 forecast represents a 150 basis point change from 0.75%.

5-Year Government Bond Yield Forecast

Bank 2010 2011
BMO 2.45 3.58
RBC 2.45 3.50
Scotia 2.70 3.50
TD 2.40 3.05
Average 2.50 3.41

5-year fixed rates follow 5-year government bond yields.

The 2010 forecast represents a change of +36 basis points from the current yields, while the 2011 forecast represents a +127 basis point change.

Variable Rate Mortgage Forecast

The average outlook right now is a prime rate increase of 150 basis points over the next 16 months, implying a  prime rate of 4.25% by December 31, 2011 (the current prime rate is 2.75%). Based on a 70 basis point discount applied to the prime rate to calculate variable rates, economists are predicting that 5-year variable mortgage rates will rest in the 3.55% range by the end of 2011.

Fixed-Rate Mortgage Forecast

5-year bond yields are expected to climb 137 basis points placing the 5-year bond yield at 3.41% by the end of 2011. Assuming a 120 basis point spread above yields, 5-year fixed mortgage rates are predicted to be approximately 4.61% by the end of 2011.

To view the most accurate and up-to-date Canadian mortgage rates, visit’s Best Mortgage Rates. Use our mortgage calculator to view the effects of the recent interest rate cuts on your mortgage payments.

Compare BMO mortgage rates; RBC mortgage rates; CIBC mortgage rates; Scotiabank mortgage rates; TD mortgage rates.