Forecasts from the Big 5 Banks Indicate a Downward Trend

It’s unanimous. Interest rates are on its way down. Here’s what the Big 5 Banks are forecasting:

1) TD Canada Trust - 3/4% drop in the prime rate (see TD Economics Commentary dated Jan 24, 2008)

2) RBC - 1% drop in the prime rate (see RBC’s Central Bank Watch dated February 2008)

3) CIBC - 1% drop in the prime rate (see CIBC World Markets Interest and Exchange Rate Forecast for Feb 5, 2008)

4) BMO - 1% drop in the prime rate (see BMO’s Econofax dated Jan 22, 2008)

5) Scotia Capital - 1/2% drop in the prime rate (see Scotia Bank’s Forecast Update dated Feb 5, 2008)

With rates expected to decline significantly in the short term, you need to sit down with your mortgage broker to design the right strategy to take advantage of lower rates. One option is to switch to a variable rate mortgage. If you are currently locked-in on a fixed rate mortgage, it may be worthwhile to switch and absorb the prepayment penalty (if any). Your mortgage broker should be able to advise you on how to properly time your transaction so you obtain the maximum benefit.