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BCREA December 2021 Mortgage Rate Forecast

Vancouver – As a result of rising cost of capital for banks, Canadian fixed mortgages are also on the rise. The average
five-year fixed rate increased from just over 2 per cent in September to 2.6 per cent currently. Based on BCREA’s outlook for economic growth and inflation, as well as the Bank of Canada’s new timetable for tightening monetary
policy, they anticipate that the average five-year fixed rate will return to its pre-pandemic level of 3 per cent by the
fourth quarter of 2022. Variable rates are forecast to rise along with the first Bank of Canada rate increase early
in the third quarter of next year. The Bank considers its equilibrium overnight rate to be between 1.75 and 2.75 per
cent.

However, in Canada’s last tightening cycle in 2018, the Bank was only able to bring its overnight rate to the
lower end of that range before the economy showed signs of weakness. Two rate increases next year would bring the
overnight rate to 0.75 per cent and implies a variable rate of about 2 per cent by the end of next year.

Mortgage Rate Forecast is published quarterly by the British Columbia Real Estate Association. Real estate boards, real estate associations and REALTORS® may reprint this content, provided that credit is given to BCREA by including the following statement: “Copyright British Columbia Real Estate Association. Reprinted with permission.” BCREA makes no guarantees as to the accuracy or completeness of this information.

Additional economics information is available on BCREA’s website at: https://www.bcrea.bc.ca/what-we-do/economics/

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