Why are the Big Bank economists varying so much in their interest rate forecasts moving forward?

TD thinks the Bank of Canada rate will stay at 2.25% though 2027.
RBC thinks is reaches 3.25%

They can’t both be right and you still need to make a mortgage decision today. So how do you make a decision when the experts disagree?

You’re not betting on what rates will do rather, you’re choosing “How much uncertainty you can afford?”

Here are the 3 questions I ask every mortgage client:

1.Can you afford a payment if your mortgage rate rises 1.5% at renewal?
-If yes, you have flexibility. If the answer is no, you need certainty.

2. Is there a likely event in the next 3 years that changes your property?
-Renovation, Sale, Refinance, Family Change. If yes, a short term or variable rate make sense. If the answer is no, lock in more certainty.

3. How do you sleep at night?
-some people are okay with payment fluctuation (ie. Variable Rate) while others lose sleep over a $200/month change in their payment. This is an important consideration when choosing rates.

Bottom Line:

If you value certainty, take a fixed rate.
If you think your situation changes significantly in 3 years (ie. you might sell your home in the next 1-3 years,” take the shorter term. This gives you flexibility without having to pay a massive penalty to break it.

• Ryan Erikson