Are Fixed Mortgage Rates on the Rise and should this be a concern?
Last week, August 20th, the Bank of Montreal took the lead in raising 2 Five Year Fixed Closed Mortgage rates by .20% with their 5 year Eco Smart ™ fixed closed to 3.79% and their 5 year low rate fixed closed to 3.79% effective August 21st. They were soon followed by RBC with increase by 0.20 per cent on 4 of their Special Rate Fixed Offers of Four-Year Closed at 3.59%, Five-Year Closed at 3.89%, Seven-Year Closed at 4.19% and Ten-Year Closed at 4.59%; and 3 of their Fixed Rate Posted Rates of the Three-Year Closed at 3.95%. Four-Year Closed at 4.74% and Five-Year Closed at 5.34%. RBC announced the rate increase on August 21st, effective August 22th followed by the other leading banks.
Homebuyers were starting to feel more confident as the National home sales edged up 0.2% from June to July according to The Canadian Real Estate Association (CREA) statistics. News of the increase could affect National Home Sales in the following months with some homebuyers hurrying to purchase a home for fear of more increases looming to lock in that fixed rate and some may just opt not to become a homebuyer because they just can’t afford it. There could be others that may not have the option after the recent news of a CMHC cap on mortgage-backed securities earlier this month (for more information, read the CBC Article on August 6th, CMHC restricts levels of new guarantees for mortgage lenders). So, should we be concerned? Today Interest rates are still the lowest in history and how much more of an increase to expect can be anyone’s guess. We went to the Bank of Canada to look up Historical interest rates, a great resource if you want to find out some detailed interest rate information, and generated some historical data on the Low, Average and High Prime rate and Mortgage Rates over the past 10 years. It’s good too look back at times and help put things in perspective and may create gratitude for great rates today or assist you in determining steps to take for your future. Prime business (‘prime rate’) Low 2009-04-01 2.25 Average 2003-08-01 — 2013-07-01 3.97 High 2007-07-01 6.25 Conventional mortgage 1-year Low 2013-01-01 3.00 Average 2003-08-01 — 2013-07-01 4.74 High 2008-01-01 7.35 Conventional mortgage – 3-year Low 2013-03-01 3.55 Average 2003-08-01 — 2013-07-01 5.32 High 2007-12-01 7.55 Conventional mortgage – 5-year Low 2013-04-01 5.14 Average 2003-08-01 — 2013-07-01 6.06 High 2007-12-01 7.54 5-year personal fixed term Low 2011-08-01 1.28 Average 2003-08-01 — 2013-07-01 2.29 High 2007-07-01 3.60 QUOTE: About the time we can make the ends meet, somebody moves the ends. Herbert Hoover Talk to your mortgage broker, or let us find a local mortgage broker for you by using our Quote System.
Your Mortgage Broker is knowledgeable and should be better able to assist with the best choices for you, whether you are a first time homebuyer, need to renew or wish to refinance your mortgage.