Focus will now shift to the Fed's remaining 2015 meetings in October and December. Whether the Fed chooses to act on rates this year or next, historically the correlation between Canadian and US long-term interest rates is very strong, even at times such as now when the two countries’ normally in sync monetary policy is heading in different directions. Therefore, as the Fed eventually moves to increase its target rate, there will likely be some upward pressure on 5-year interest rates in Canada. When paired with a recovering Canadian economy, this will likely translate to higher fixed mortgage rates by the middle of next year.
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