Both TD Canada Trust and Royal Bank of Canada have announced today that their fixed rates are on the rise due to the steadily increasing cost of borrowing. While this wasn't unexpected, the amount of the increase 0.6% for each on their 5-year rates was perhaps a surprise.
Fixed-rate mortgages tend to move when bond yields move. The driving force behind the change in Canada's bond market is the notion that the Bank of Canada might need to raise interest rates sooner than previously thought.
With those major banks having moved their rates already, many other lenders will likely follow. For me as a Realtor®, this means that my clients' purchasing power is diminishing. Higher interest rates mean lower qualification ceilings. It's important that my clients move quickly to secure a good rate!
If you are thinking about purchasing in the next three to four months, you could save thousands over a five year term. On a $300,000 purchase the rate hike could add an additional $180.00 or more on your monthly payment costing over $10,000 over the next 5 years.
It’s important that clients lock in a rate IMMEDIATELY, preserving such a rate for 90 to 120 days, meaning that even if rates go up further, they're protected. As of today (Monday, March 29, 2010) some banks we're still able to lock rates at 3.89% for a 5-year fixed rate today, but there is no guarantee that will be available tomorrow.
Talk to a qualified mortgage broker for advise on your particular situation and circumstances. If you don't have a mortgage broker I would be happy to recommend a qualified broker for you.