FINANCIAL POST – The clock is about to strike midnight for mortgages rates that have been the best deal of the past half-century — at least as far as the major banks are concerned.
Bank of Montreal’s recent cut-rate 2.99% five-year fixed closed mortgage is set to expire March 28 and, not surprisingly, competitors have already signaled they are ready to raise rates in the wake of the sale ending.
Royal Bank of Canada and Toronto-Dominion Bank were the latest to do so, announcing they had ended their offer of a 2.99% rate on closed four-year mortgage. Bank of Nova Scotia had quietly been telling mortgage brokers last week that it had planned to do the same.
Critics complained the deal included restrictions like a 25-year amortization and limited prepayment privileges.
While the Banks are raising rates, smaller lenders like credit unions continue to offer five-year rates below that 3% threshold on five-year mortgage.
For the banks, it was inevitable that they would raise rates given rising governing bond yields, which are generally used to price mortgages.
It does look like the tide has turned on the bond market, which seems to be pushing nervous consumers to lock in rates. Bond yields have climbed about 50 basis points in the past two weeks on the five-year government of Canada bond.
As history is known to repeat itself, we’ve been cautioned that the bond market has been hard to predict in the past so we can’t rule out market conditions changing yet again.
It does seem like things have shifted – we’ve had a number of selloffs over the years in the bond market and the bull market has come running back with a vengeance so you never want to say never.
It’s still unclear what it will mean for the spring housing market, which could get a boost from low rates and early warm weather.
Historically when potential buyers get a whiff that things may be shifting on the interest rate landscape, it often pulls anybody on the fence off of the fence.
DON’T CHANCE THE MARKET OR BE DICTATED BY RATES. “IT’S NOT ALWAYS ABOUT RATE!” AFTERALL, DO YOU KNOW WHERE YOU WILL BE IN 5 OR 10 YEARS FROM NOW? BEYOND OUR CONTROL, ON TOP OF RISING PRICES FOR OUR EVERYDAY STAPLES, SUCH AS GAS, HEAT, AND FOOD…WILL YOU BE ABLE TO AFFORD HIGHER INTEREST RATES WHEN IT’S TIME FOR YOU TO RENEW YOUR MORTGAGE?
DON’T WAIT! KEY WORDS TO CONSIDER ARE: BUDGET, BUDGET, AND BUDGET. I’m on your side ~ 289.271.2710 ~ www.denisedunkley.ca