Banks pull trigger on rate hikes
May 1, 2018
TD Bank was the first on the draw but other big banks are expected to also pull the trigger on mortgage rate increases. In fact, one already has.
TD raised its posted rate for five-year fixed mortgages by 45 basis points to 5.59 per cent as government bond yields hit their highest levels since 2011 last week.
TD also lifted its five-year closed rate April 25, along with increases to its two-year, three-year, six-year and seven-year mortgage rates.
RBC Royal Bank followed TD’s lead, boosting fixed-rate mortgages of between one and four years, and five to 10 years. RBC’s new five-year fixed-rate loan will be 5.34 per cent as of April 30.
Among Canada's three other big banks, Scotia and BMO currently have a five-year rate of 5.14 per cent, while CIBC is at 4.99 per cent.
All of the major banks are expected to match the TD and RBC rate increases.
Toronto financial planner Jason Heath says the move is bad news for first-time buyers, but those hit hardest are likely to be existing homeowners, almost half of which are due to renew their mortgages this year.
"I think you'll see more banks able to raise rates, because they have some borrowers captive," Heath said in an interview with CBC news.
"There's going to be less competition between banks and less ability for borrowers to move from bank to bank."