—TD Macro Strategist, David Tulk
Good thing, because they were “a little off” once again.
The latest Bloomberg economist survey shows the economic establishment now forecasting a 75 bps bump in the overnight rate by the end of 2012. That’s half the increase that economists predicted last month. Economists’ median rate estimates now imply a 3.75% prime rate by the end of next year, followed by 100 bps of more tightening in 2013. A separate survey from Reuters shows analysts expecting the BoC’s rate hike campaign to resume in Q2 2012. (That’s been pushed back from their Q4 2011 prediction a month ago.)
If you’re buying into these forecasts and you don’t plan to pay off your mortgage anytime soon, a 4-year fixed near 3% still reigns supreme. It continues to have the lowest hypothetical cost of any term in our rate simulations
ǂ Said simulations compare all terms and series of terms over a set five year period. They are based on the lowest available rates for each term, historical rate spreads (for estimating renewal rates), and the aforementioned economic forecasts. It is assumed that the 4-year fixed borrower will renew into either a 1-year fixed or a variable rate at maturity. All forecasts are subject to revision and random error. This is not a recommendation as your needs may vary. Speak with a professional mortgage advisor for advice suitable for your circumstances.