Mortgage Rates Are On The Rise

If you have been wondering when to lock in your interest rates or ensure you have a rate hold, it looks like now is the time.

The Globe and Mail posted this yesterday:

"Royal Bank of Canada, the country's largest bank, has raised mortgage rates again.  The move, which will result in a 0.25 percentage point increase in the cost of a number of fixed-rate mortgage products that the bank offers, is likely to spark another round of rate hikes among the country's mortgage lenders.

RBC kicked off one series of hikes a little more than two weeks ago, and most experts said that was the start of a steady rise in mortgage rates. At that time the cost of a five-year closed rate mortgage from RBC and many of its competitors rose by 0.60 percentage points to 5.85 per cent. Tuesday's increase will raise the rate for a five-year mortgage from RBC further, to 6.10 per cent, effective Wednesday.

Royal Bank's Canadian mortgage portfolio amounted to about $148.5-billion in the latest quarter.

The banks say they are raising rates because their cost of funds is increasing." 

The Globe and Mail also has a video with TD Bank's chief economist Don Drummond on Rising rates and your mortgage.  He explains where rates will go.  Watch The Video.

What does this mean to our monthly mortgage payments and affordability?  Below is a table for a $300,000 purchase with 10% down payment and the payment you might expect at different rates (Based on a 25 year amortization).

Rate A Rate B Rate C
Purchase Price: $300,000 $300,000 $300,000
Down Payment: $30,000 $30,000 $30,000
Mortgage Principle $270,000 $270,000 $270,000
5 Year Rate 5.20% 5.85% 6.10%
Monthly Payment.      $1,601.21                  $ 1,703.48                   $1,743.56

0.60 Points Increase 0.25 Points Increase


Monthly affordability definitely impacted with fluctuations in the rates.  Century 21 has a mortgage calculator online to assist you with determining the affordability for you.  It's best to consult with your bank or mortgage broker.  You can check out Scott Bourke at Regional Mortgage on Twitter for additional information on mortgages as well.  Scott has some rates on the 5 year mortgage at 4.19%.  The same mortgage at that interest rate would have a monthly payment of:  $1,448.20.  I can think of several ways to spend that $300 savings how about you?

Your Friend in Real Estate,

Patrick Galesloot

I'm on Twitter:  @pgalesloot


Patrick Galesloot

Patrick Galesloot

CENTURY 21 Advantage
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