I hate people who say " I told you so", but the fact is, I have been warning everyone for months that the incredible mortgage rates we have been enjoying would not last much longer. So far, we are only seeing changes to fixed rate mortgages. Variable rate mortgages are still attractively priced, since the prime rate is only 2.25% today. Here is the latest announcement.
Royal Bank of Canada, the country’s largest bank, is leading the way on another round of mortgage-rate hikes, boosting borrowing costs Monday for the third time in recent weeks.
The rate on a five-year closed mortgage is now 6.25 per cent, an increase from the previous rate of 6.10 per cent. A one-year closed rate will, as of tomorrow, be priced at 3.80 per cent. All rates were increased by 15 basis points.
It’s the third move in a month as Canadian banks prepare for an era of rising interest rates. The Bank of Canada last week signalled that its key lending rate will rise, as early as June, as the economy recovers.
Banks can adjust the rate they charge, so customers could still pay a lower rate than what’s posted. Other banks tend to follow with rate hikes once one does, and the actual rate a customer pays depends on a variety of factors, including their financial situation, whether they use a mortgage broker, and how good they are at negotiating.
The hike comes the same day as Canada Mortgage and Housing Corp. released a study showing that 81 per cent of recent home buyers feel comfortable with their current level of debt.
Two thirds of the 2,500 people surveyed said there is a chance they will pay off their mortgage sooner than required, while 27 per cent said they have increased regular payments to eliminate their mortgage sooner.
For advice on mortgage and other financial matters, email Ross at rosst@rosstaylor.org, or give him a call at 416 989 1000.
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