Gina Burgio, Mortgage Agent

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It's finally happening, mortgage rates starting to rise in Canada

We all expected to see this but I'm surprised to see it happening so soon. Undoubtedly rates will now only continue to rise.

GB

 

Banks bump up mortgage rates

Other banks expected to follow suit

www.cbc.ca


Mortgage rates have begun to rise from their record lows, with news Monday that several Canadian banks are increasing several fixed mortgage rates by up to 6/10ths of a percentage point.

The biggest jump is attached to the popular five-year fixed closed rate, which moves from 5.25 per cent to 5.85 per cent at Royal Bank, TD Canada Trust, and Laurentian Bank. That's the posted rate, which is routinely discounted by the big banks.

RBC's new discounted rate for the five-year term also rises 6/10ths of a percentage point to 4.59 per cent. TD's rises the same amount to 4.55 per cent. The discounted rate at Laurentian moves up to 4.54 per cent.

How much difference will that make? A $200,000 mortgage amortized over 25 years costs $1,051 a month at a rate of 3.99 per cent. At 4.59 per cent, that jumps $66 a month to $1,117.

The banks also raised their three-year and four-year fixed closed rates. The posted three-year rate at Royal Bank and Laurentian climbs one-fifth of a percentage point to 4.35 per cent, while the posted rate at TD jumps 4/10ths of a point to 4.70 per cent.

The posted four-year rate at all three banks jumps 4/10ths of a percentage point to 5.34 per cent.

Other banks are expected to follow suit. The new rates, effective Tuesday, represent the first hike in Canadian mortgage rates since last October. The posted five-year rate is now back to where it was for much of last summer.

New mortgage rules that go into effect next month require borrowers to qualify at the five-year rate, rather than the old three-year standard, even if they are applying for a variable rate mortgage.

Variable rates expected to rise soon

Variable mortgage rates, which rise in tandem with the Bank of Canada's key overnight lending rate, are not affected by Monday's announcement. But they are likely to be heading up soon too.

Bank of Canada governor Mark Carney warned last week that inflation was higher than expected. That had some market watchers forecasting that the central bank could move to raise its key lending rate as early as June. The possibility of an earlier rate hike sent bond yields up, and that appears to have prompted Monday's mortgage increase. Fixed mortgage rates tend to move higher when long-term bond yields rise.

The key rate has been at a rock-bottom 0.25 per cent since April 2009 to help the economy recover.

A report out Monday from CIBC World Markets said rising rates shouldn't be enough to derail the stock market rally - pointing out that the market is historically strong six months before and after rate increases.

A survey released last week by RBC found almost two-thirds of respondents expected the cost of servicing a mortgage to rise this year.



Read more: http://www.cbc.ca/money/story/2010/03/29/mortgage-rates-up.html#ixzz0jlqjf9St

 

Gina Burgio

Gina Burgio, Mortgage Agent
VERICO Designer Mortgages Inc.
Toll Free: 1-877-345-6265
Fax: 1-877-345-6256
Email: gina@ginaburgio.com

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Comment balloon 5 commentsGina Burgio • March 31 2010 11:22AM

Comments

I'm wondering when this will happen to your southern neighbors

Posted by MJ Anton over 7 years ago

Gina, I'm not surprised.  They can't stay like this forever, particularly with the inflationary pressure on the whole economic house of cards.

Posted by Craig Richardson (National Realty) over 7 years ago

Gina, let us know what effects you will see, hopefully some of the fence sitters jumping in before rates climb more.

Posted by Endre Barath, Jr., Realtor - Los Angeles Home Sales 310.486.1002 (Berkshire Hathaway HomeServices) over 7 years ago

Well I had assumed it would happen sometime later this year but my guess was that they would hold fairly strong until after the HST.  oh well.. I will surely update with reactions, Endre!

Posted by Gina Burgio (VERICO Designer Mortgages Inc.) over 7 years ago

hey Gina, i just got back on activerain and got busy blogging again.  you were one of the first people i followed here about 7 years ago, so i was just checking to see if you still log in here or if these comments still reach you.

Posted by Robert May, Real estate consulting (Robert W May - Lethbridge Real Estate) almost 2 years ago

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