Toronto Mortgage rates expected to rise – the Trump effect
Last week TD Bank decided to increase their Prime rate from 2.70% to 2.85%. Analysts speculated other banks would follow suit, but not as yet.
Yesterday though, a number of significant players in the Canadian mortgage industry suddenly announced significant increases to their five year fixed rate mortgage rates. Lendwise, Merix, MCAP, RMG, TD, CMLS all bumped up their rates from 0.10% to 0.25%.
ICICI Bank just announced their core rate will increase to 2.69% from 2.44% at 5 pm today.
And the Royal Bank says their promotional five year rate will jump to 2.94% on Thursday! That’s a jump of 0.3%
Expect many other lenders will follow suit over the next day or two.
Could this be the start of something insidious? Has the Trump effect gotten tangled up in our real estate market?
Time will tell. For now, the reason for the upward pressure on rates is that Canadian Bond Rates are on the rise.
This morning Canadian Mortgage Trends had this to say:
For many home owners, it has been lots of fun the past seven years or so. Historically low interest rates and an incredibly strong real estate market has created lots of wealth in the form of increased home equity.
Toronto mortgage brokers worked late into the night yesterday submitting applications to their preferred lenders BEFORE the rate increases took effect at midnight. Expect more of the same in the coming days.
It seems the Toronto real estate market has been buffeted like a small ship in a storm in recent months. At some point you’d think we will feel the impact of government Intervention:
- Changes to minimum down payment requirements
- The introduction of a stress test on all high ratio mortgage applications
- A punitive 15% tax on foreign investors in Greater Vancouver
- And now a sudden spike in interest rates
But so far, the Toronto real estate market has brushed aside all such interference – the market remains hot and values escalating at an insane pace.
And in some GOOD NEWS yesterday, the Ontario Government increased the Land Transfer Tax rebate afforded to First Time Home Buyers. Check out this article from the Financial Post.
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