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 Jun 13, 2008 Mortgage rates start to increase Mortgage rates are rising, a trend that's likely to continue as the Bank of Canada shifts its focus from stimulating the economy to taming inflation. A five-year fixed mortgage will now cost half a percentage point more than it did Wednesday at many of the country's big banks. This means the average customer can expect to pay a discounted rate of about 6.09 per cent for a five-year fixed term, compared with Wednesday's 5.59 per cent. The move came sooner than some industry watchers had expected, and was driven largely by a spike in five-year bond yields caused by concerns about the rising cost of living. "All of us have been struggling, banks and mortgage lenders, from the higher cost of funds and liquidity premiums," said Joan Dal Bianco, vice-president of real estate secured lending at TD Canada Trust. Bond yields, on which fixed mortgage rates are based, rose sharply after the Bank of Canada surprised the markets with the announcement that it would freeze, rather than cut, its key lending rate. Since Monday's close, the yield on five-year Government of Canada bonds has risen 25 basis points. This clinched the decision to raise fixed mortgage rates, Ms. Dal Bianco said. The increase in mortgage rates comes at the same time the housing market is softening, with sales dropping and a glut of listings flooding the market in a number of cities. For those considering a home purchase, there's still about a week to lock in at Wednesday's rates, said Gary Siegle, Prairies regional manager for mortgage broker Invis. (prepared by Lori McLeod/Globe & Mail) Go Back To The Market Updates Page Questions? No problem! For more information, please feel free to contact June Conway toll free at +1.888.657.7123. Of course, you could always just email June Here . |
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