Canadian rates will follow their own path.Our economy isn’t sturdyenough to trackU.S. rates higher…for long. Economists have been singing that tunefor months now. And yet,Canada’s closely watched 5-year yield andits American cousin (the U.S. 5-year note) are moving together like train tracks. Why aren’t Canadian rates diverging more from U.S. rates? Technical factors aside, maybe the all-knowing market machine sees...
It’s getting more expensive to lower your mortgage payments. TD became the second major bank today to announce higher rates on amortizations over 25 years.RBC startedthis trend a few weeks ago. “Effective Dec. 1, 2016, new fixed rate mortgages that have an amortization of greater than 25 years will have an additional 10 bps added to their overall rate,” said...
Last week RBC threw a 2.94% 5-year fixed rate against the wall to see if it would stick. It hoped its bank peers would seize this opportunity for extra profit by raising their rates commensurately. But RBC’s trial balloon ain’t flyin. Not yet anyway. None of its peers have matched the extentof RBC’s rate hikes. Most have only raised 10-20...
What next? A major bank (RBC) is now charging extra for amortizations over 25 years. This morning RBC announced that, effective November 17, it’ll ding youan additional10 basis points for26- to 30-yearamortizations. We don’t recall anything like this from a major bank before. “This is the first time we have introduced new pricing for clients who choose to amortize their...
It’s been over a week since TD boostedits “mortgage prime” rate in unprecedented fashion, and so far, the other banks have left TDout to dry. None of them have copied its15 bps hike on variable-rate borrowers. If allthe other banks foregothis opportunity to pad their revenue, itwouldn’t be shocking, but it would be unexpected. OSFI’snew capital rules took effect for...
In an unprecedented move by TD, the bank has raised its mortgage prime rate independent of the Bank of Canada. The country’s second largest bank has boosted its “mortgage prime” to 2.85% from 2.70%, where it has stood since July 2015. “This is the first time we’ve increased our TD Mortgage Prime rate independent of a Bank of Canada rate...
Variable-rate holderscan sit back in their easy-chair. Prime rate iscemented at 2.70% after the Bank of Canada pushed out itsforecasted economic recovery for the umpteenth time. The Bank said there’s now “heightened uncertainty” in its rate outlook, as if it had any certainty before. It nevertheless hasconsultedits black box models, which purblindly forecast 2% growth through 2018. Two percent growth...
Effective January 1, 2017, financial regulators willmake default insurers (like CMHC) hold morecapitalwhen insuringmortgages in highly valued cities. The purposeis to keep government-backedinsurers more solventif home pricesfall off a cliff. But financial stability has a cost. Capitalis not free so both insurers and lenders will look for ways to offset thishigher cost. Potentialramifications for borrowers couldinclude: Higher insurance premiums expect...
“Young folks with mortgages regularly thank me for keeping interest rates low.“ —Bank of Canada Governor, Stephen Poloz In fact, Mr. Poloz’s decisions to keep rates low have practically been made for him, by serially disappointing economic data. Monetary policy has merely reacted to what he terms “a steady decline in the potential growth rate of the economy.” The...
The mortgage industry’s most-watched number — Canada’s5-year government yield — is back above its midpoint for the year. As regular readers know, bond yields drive thefixed mortgage rate bus. The best mortgage rates barelybudged this week. Yields have sprung back to life, however, in reactionto: the U.S. Fed’s incessant chirping about approaching rate hikes (chirping punctuated by its continualcontradictionson rate...
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