BUSINESS
04/27/2018 13:01 EDT | Updated 04/27/2018 13:07 EDT

TD Bank, RBC Mortgage Rate Hikes Are Bad News For Borrowers Facing 'Stress Test'

The banks' benchmark rates are used to determine the size of the "stress test" mortgage borrowers have to pass.

A TD Canada Trust branch is shown in the financial district in Toronto on August 22, 2017. Two of Canada's biggest banks are raising their benchmark rates for five-year, fixed-rate mortgages.
A TD Canada Trust branch is shown in the financial district in Toronto on August 22, 2017. Two of Canada's biggest banks are raising their benchmark rates for five-year, fixed-rate mortgages.

TORONTO — Two of Canada's biggest banks are raising their benchmark rates for five-year, fixed-rate mortgages.

TD says as of Wednesday it increased its posted rate for five-year fixed mortgages to 5.59 per cent from 5.14 per cent.

Watch: How rising interest rates affect mortgages

Mortgage planner and rate comparison website founder Robert McLister says the increase is "unusual" as the benchmark rate hasn't seen a jump of 45 basis points or more since March 2010.

TD spokeswoman Julie Bellissimo says a number of factors are considered when determining rates including the competitive landscape, the cost of lending and managing risk.

Meanwhile, Royal Bank spokesman AJ Goodman says the lender plans to raise its posted rate for a five-year fixed mortgage on Monday to 5.34 per cent compared with the 5.14 per cent currently posted.

McLister says the actual rates banks offer to borrowers are not seeing an increase, but notes the Bank of Canada uses the posted rates at the big banks to calculate the rate used in stress tests to determine whether homebuyers qualify for loans.

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