BUSINESS

TD Canada Trust Mortgage Rate Hike Follows Identical Move By RBC

06/11/2013 12:41 EDT
CP

TD Canada Trust has joined RBC in hiking its fixed-rate mortgage rates, and experts predict further hikes because Canada’s lenders are seeing their own costs rise.

Effective Tuesday, a five-year closed offer mortgage will go for 3.29 per cent, up from 3.09 per cent, the bank said in a statement.

That follows an identical move by RBC, which hiked its five-year fixed rate to 3.29 per cent last week.

Some mortgage experts are urging owners and prospective buyers to lock in a mortgage rate now, because they say banks are going to have no choice but to hike their rates.

The cost of fixed-rate mortgages is tied directly to bond yields, which are rising and therefore pushing banks’ costs higher.

Some of that is evidently coming from growing pessimism in foreign markets about Canada’s economic prospects.

Continued volatility among some of Canada’s trade market partners have some investors shying from our once ‘safe haven’ status bonds, pushing yields higher, and, as a result, fixed mortgage rates,” Mary Zenar of Zenar Financial said, as quoted at RateSupermarket.

However, she expects that “any fixed mortgage rate increase will be modest.”

It's a different story with variable rate mortgages, which are tied to the Bank of Canada’s overnight lending rate, and not the bond markets. As the BoC isn’t expected to hike rates any time soon, variable rate mortgages aren’t expected to see any major rate hikes.

However, nearly 7 in 10 Canadians have a fixed-rate mortgage.

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