The 1 year, 3 years, 5 years fixed mortgage rates and the variable rate (prime rate) tell a lot about the state of economy in Canada.
For the last 50 years, the economy cycle is 10 years, meaning a recession year will gradually go back to some good years and then falls back into recession 10 years later :
1988 : recession
1998 : recession
2008 : recession
Economist’s forecats are never good, you can make a good judgement of the economy by keeping track of the mortgage fixed and variable rate.
When fixed and variable mortgage rate merge, it is sign of upcoming recession
We always associate an economy recession as bad for real estate, it is not always true for Canada except the period of 1988-1988 where the value of homes has decreased, but a home is a home, you don’t lose money if you don’t sell your house. Demographics and jobs are the major factor for house values. Canada has only four major cities, Montreal, Toronto, Calgary and Vancouver, canadian looking for jobs do not move freely from one city to another as americans do. If net migration to a city is high and mortgage rates are affordable, houses will sell. It is a safe bet to buy a house as long you can afford. A house is an investment, not a commodity, deciding how long to keep a house will determine the term (1 year, 3 years, 5 years) of the mortgage to borrow. Have a good common sense of world economy, in 2016 not a G7 country will be able to rise the interest rate, next look at the percentage difference of the fixed and variable rate, always choose the lowest rate and the shorter term. Doing so will eliminate risks of paying more interests, risks of uncertainty of the economy, and be able to change mortgage terms at appropriate time when renewing the mortgage.