While the benchmark qualifying rate for Canadian mortgages has not changed in the past eight months, offered or discounted mortgage rates at banks and by other lenders
have recently moved higher. The average 5-year rate offered by lenders has increased by about 20 basis points in recent weeks to 2.79 per cent and the discount from prime
lending rates on variable rate mortgages has narrowed from 60 to 40 basis points.
These increases are largely due to regulatory and other market structure changes that are pushing the bank's cost of capital higher.
While these recent increases are likely one-time adjustments, with the forthcoming normalization of US monetary policy will likely be a more persistent factor in determining future mortgage rates.
Given stable inflation and moderate economic growth in the Canadian economy, pressure from rising US rates will likely be the main source of upward pressure on mortgage
rates over the next year. They are forecasting that 5-year qualifying rate on mortgages will increase to 4.79 per cent in early 2016 before gradually rising to 5.11 by the end
of next year.