TD Canada Trust, CIBC, RBC and have all raised their mortgage rates. The five-year closed fixed rate mortgage is up 25 basis points to 5.44%.
The rate for TD’s five-year special closed fixed rate also increased by 25 basis points, and will now be 4.39%.
As of the writing of this story, BMO and The Bank of Nova Scotia had not yet raised rates; their five year rate was holding steady at 5.19%. Typically, though, when one of the big five banks raises their rates, it is not long before the others follow suit.
This is significant, not only for the rate hike- but because this signals the first activity in this regard after Jim Flaherty’s mortgage lending restriction announcements last month.
The changes affected the amortization of mortgages- they can now no longer exceed 30 years; similarly, there were more restrictions put on refinancing- allowing only 85% of equity takeout- rather than 90%.
The rate increase is not significant, but it will interesting to see if it enough put to test all the fears and predictions regarding rising interest rates, debt management, and overstretched household credit capacities hold water or not. Seemingly, the banks are slowing introducing these rate hikes, at a reasonable pace behind Flaherty’s lending changes- giving both the lenders and the consumers a chance to catch their collective financial breath to gain footing and stamina to manage more.
Matt Daniels, Mortgage Broker/Owner with Ottawa Mortgage Advisors weighs in on this recent interest rate hike, and on possible implications to Canadian debt loads “The regulation in our industry is now being adopted all over the world because of how well the Canadian real estate and mortgage market faired during the recent recession. Rates are still basically at historical levels so I do not think it is a big surprise that they are going up. We have been advising our clients for the past 2 years to make sure they felt comfortable with a payment a few percentage points higher because on renewal it is unlikely that they could receive the same low rate“.