We were promised increases in mortgage rates and it appears we were not let down.
Current Mortgage Rates as at Tuesday August 20th - Prime Rate for Variables is still 3.00%
Please note that rate discounts may be available for quick closings (30 to 60 days)
4 Year Fixed: 3.29%
5 Year Fixed: 3.59%
10 Year Fixed: 4.19%
Variable 5 Year: Prime -.4% (2.60%)
Bank of Canada Benchmark Rate: 5.14%
WHY THE INCREASE.......
Canada Mortgage and Housing Corp. has notified mortgage lenders, including banks and credit unions, it will restrict each of them to a maximum of $350 million of new guarantees in August under its National Housing Act Mortgage-Backed Securities program.
For lenders who package their mortgage loans and sell them as securities to investors, the CMHCprogram takes out the risk by guaranteeing payments on the investments, and allows the lenders to use the proceeds as capital for new loans and offer them more cheaply.
In simple terms; limiting the banks ability to sell these guaranteed investments as they do, limits the amount of money the banks have to lend out in mortgages. Basic supply and demand comes into play and therefore the cost of mortgages increases.
We may very well have seen the last of our below 3% fixed mortgage rates. For any of you who got into the mortgage market during this recession, these increasing rates may leave a bad taste in your mouth. Many who were in the mortgage market pre-2008 remember that mortgage rates in the low five percents was a great rate.Please remember you can contact your CENTUM Mortgage Specialist if you have any concerns about rising rates. We are also available if you would like to see what a future of 5% mortgage rates might look like and determine how your household will handle it.
While it is CENTUM's goal to always get the best rates and terms for Canadians, we strongly encourage planning ahead to safeguard your family.