The next interest rate announcement from the Bank of Canada is scheduled for March 3rd. Most analysts expect that the Bank of Canada will drop their overnight rate by between 1/4 and 1/2% and many feel it will be the 1/2% drop. If the rate does drop by ½% and the lenders pass these savings on most people with a discounted variable rate mortgage could see the rate they are paying on their mortgages drop below 2%. So if you are in a variable rate mortgage that is of the prime minus variety I would stick with it. The five year fixed rates are not tied to what the Bank of Canada does so it is a bit more difficult to say where they will go. The interest rates on five year Government of Canada bonds dropped during the last quarter of 2008 but stated to go up again in the first quarter of 2008. They have been steady for the last week or two. In the past this would have indicated that rates on the five year fixed mortgages would also go up. However with the slower market the banks are fighting to get more business in the door which means they may not move the rates up right away. On a positve note I am seeing more activity on the real estate purchase side as some of the buyers priced out of the market previously can now afford to get in. At the beginning of 2008 someone looking to buy a typical one bedroom apartment in downtown Vancouver with a 5% down payment would have had a monthly mortgage payment of $2,000. That same buyer today is looking at a monthly mortgage payment of $1,400. I know this still seems like a lot of money for a one bedroom apartment but it does show that it is more affordable for someone to buy now.