Mortgage rates in Canada are on the move for the first time in nearly 7 years. The Bank of Canada finally increased mortgage rates on July 12th, 2017. The Bank of Canada raised the mortgage rate 0.25 percentage points to 0.75 percent.
A big question to ask homeowners now is that should they stay with a variable mortgage rate or should they lock in to a fixed mortgage rate?
In response to the Bank of Canada increasing the mortgage rate, banks have already started strategically raising their rates.
Banks Mortgage Rates Increase
BMO five-year fixed and five-year “smart fixed” mortgage rates increased by 20 basis points on July 7th. This move increased BMO’s rates to 2.89 and 2.79 percent, when based on a 25-year amortization period. In addition, BMO also increased their 3-year mortgage rate by 10 basis points to 2.64 percent.
Following in BMO’s foot prints, CIBC also raised its mortgage rates between 5 to 15 basis points on July 8th. As a result, this increased CIBC five-year fixed mortgage to 4.79 percent. In addition, CIBC’s a special offer three-year fixed mortgage went from 2.59 percent to 2.69 percent.
RBC was one of the first banks to react to the Bank of Canada’s announcement. RBC increased their 2-, 3-, and 5-year fixed-term rates by 20 basis points. RBC’s 2-year rate is now 2.54 percent, the 3-year rate is 2.64 percent, and the 5-year rate is up to 2.84 percent.
Other Affects in the Market
Sources claim that the Canadian economy is in stable condition. With this good news, it seems that now would be the time Canadians can afford to pay more on interest.
In addition, with having a strong economy, its is said that the Canadian dollar will also be positively affected. The Canadian dollar is predicted to go from its current rate at 0.78 cents U.S. to .80 cents U.S by the end of next month.
With the possibility of good thing to come, also comes the possibility of bad things. It has also been predicted that with the state of the housing market, the mortgage rate increase could have a negative affect with homeowners. With Canadian homeowners carrying large debts, an increase in mortgage rates could prevent them from being able to make their payments.
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