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Thread: TD, Royal Bank both raise their fixed mortgage rates

  1. #1

    TD, Royal Bank both raise their fixed mortgage rates

    TD, Royal Bank both raise their fixed mortgage rates

    At 6.5%, interest payments would double cost of the mortgage over 25 years

    Pete Evans CBC News Posted: Apr 27, 2018 11:00 AM ET

    Two of Canada's biggest lenders have hiked their benchmark mortgage rates, with Toronto-Dominion Bank raising its posted five-year fixed rate by 45 hundredths of a percentage point and Royal Bank moving its up by 20.

    TD moved this week to raise five of its fixed-rate mortgages by between 10 and 50 hundredths of a percentage point.

    Starting now:

    TD's two-year closed rate is 3.44 per cent, up from 3.34 previously.

    TD's three-year closed rate is 3.59 per cent, up from 3.49 previously.

    TD's benchmark five-year closed rate is 5.59 per cent, up from 5.14 per cent.

    TD's six-year closed rate is 5.64 per cent, up from 5.14 per cent previously.

    TD's seven-year closed rate is 5.80 per cent, up from 5.3 per cent previously.

    "Adjusting our rates is not a decision we take lightly," TD spokesperson Julie Bellissimo told CBC News in a statement. "Even with this change, lending rates remain competitive and at historically low levels."

    Fixed-rate mortgages are tied to what's happening in the bond market, and bond yields in Canada and the U.S. are near multi-year highs right now, which is why banks are passing those added costs on to consumers. "We look at a number of factors when determining rates including the competitive landscape, the cost of lending and managing risk," Bellissimo said.

    A plurality of first-time buyers opt for a five-year, fixed-rate mortgages, but most are able to negotiate better rates than the posted ones. The average of the big banks' posted rates is one of the two benchmarks by which the banks measure their new "stress tests" of buyers.

    Which means even if you can negotiate a better rate and most people do your lender is obligated to test your ability to pay back the loan as though your mortgage rate is that high.

    And if you don't pass the test, the bank can't loan you the money.

    After TD raised its rates, Royal Bank made a change of its own, boosting fixed-rate mortgages of between one and four years by 15 hundredths of a point, and five-to-10-year loans by 20 hundredths of a point as of Monday.

    For a benchmark five-year fixed-rate loan, that means Royal's new rate will be 5.34 per cent, as of April 30.

    Among Canada's three other big banks, Scotia and BMO currently have a five-year rate of 5.14 per cent, while CIBC is at 4.99.

    Now that two of the banks have moved, would-be homeowners should expect more of the same from other lenders, author and financial advisor Hilliard MacBeth said in an interview Friday. "Seems to me that once one of them moves, they all seem to move," he said. "I've never seen it any other way."

    While still low by historical standards, at almost six per cent, MacBeth says rates are now approaching the level where the interest costs double the price of the home over 25 years.

    "With a $100,000 down payment and an assist from the bank of mom and dad," he said, "you buy a $600,000 house with a $500,000 mortgage."

    At 6.5 per cent interest, that $500,000 mortgage ends up costing more than $500,000 in interest over 25 years, he says, bringing the actual price tag of the home to almost $1.1 million.

    "It's funny how people focus on the rate, because it's not the rate that matters, it's that we're paying almost triple what we did 15 years ago for our houses," MacBeth said.

    Fee-only financial planner Jason Heath says the move is obviously bad news for first-time buyers, but those hit hardest are likely to be existing owners, almost half of which are due to renew their mortgages this year.

    "I think you'll see more banks able to raise rates, because they have some borrowers captive," Heath said in an interview.

    "There's going to be less competition between banks and less ability for borrowers to move from bank to bank."

    http://www.cbc.ca/news/business/bank...p=FB_Post_News

  2. #2
    Sure, why not?
    Don’t let Hydro, Rogers, oil companies and Liberals have all the fun.

  3. #3
    These are posted rates. When the rates were lower before the increase, I know TD was offering 3.29% and free legal fees and appraisals. I heard another bank was offering 3.19% for 5 years and others at 3.49%. The high posted rates mean nothing to rate shoppers although qualifying will be harder due to higher rates.

    And when you are going to renew your mortgage negotiate with your current lender. If you are a good client they will not want to lose your business as it costs them a lot more to get new business. If you know a mortgage broker use them to find you the lowest rate and once you have it, go to your bank and tell them what you have been offered. There is a good chance they will match or beat the rate.
    "The envy of all mankind". Don't believe me, just ask her

  4. #4
    Quote Originally Posted by Samranchoi View Post
    These are posted rates. When the rates were lower before the increase, I know TD was offering 3.29% and free legal fees and appraisals. I heard another bank was offering 3.19% for 5 years and others at 3.49%. The high posted rates mean nothing to rate shoppers although qualifying will be harder due to higher rates.

    And when you are going to renew your mortgage negotiate with your current lender. If you are a good client they will not want to lose your business as it costs them a lot more to get new business. If you know a mortgage broker use them to find you the lowest rate and once you have it, go to your bank and tell them what you have been offered. There is a good chance they will match or beat the rate.
    That's the trick. Your current bank knows you already. They know if you can't qualify under the new rules, so there will be much less negotiating at renewal time. Maybe they drop their posted rate down to 3.8% but they don't have to go all the way down to 3.2%. Banks will make money this year.

  5. #5
    Quote Originally Posted by wonkyknee View Post
    That's the trick. Your current bank knows you already. They know if you can't qualify under the new rules, so there will be much less negotiating at renewal time. Maybe they drop their posted rate down to 3.8% but they don't have to go all the way down to 3.2%. Banks will make money this year.
    Banks make money every year, it just how many billions will it be and how many Millions will the top executives make in bonuses. Many, if not all, of the major banks in Canada, provide funds to "monolines" who deal strictly with mortgages and they lend funds out for the big Banks at much lower rates than those posted by RBC, TD, CIBC, etc.... And at renewal time, the posted rates that monolines have are much lower than the posted rates at the major banks. It is too late for many but with the ever changing mortgage rules, it may be better to go with a "non bank" for your mortgage if you want the lowest rate the first time around and at renewal. Lenders are still able to go outside of the mortgage rules since they are "balance sheet" lenders so if you are seen as a high value client you at least have some good options even if you don't technically qualify for a mortgage using the new guidelines. For those who are "just getting by" or who years ago qualified under the mortgage rules at the time (like a stated income program), it may be more difficult to change lenders at any time and get what you feel is a good rate. There is a reason why more lenders are entering the "B" space in mortgage lending.

    My comments are only a small part of what is going on in the mortgage lending market and everyone will have their own take on mortgage rates and qualifying. Just trying to provide little info for those who have little knowledge of the mortgage market in the GTA
    "The envy of all mankind". Don't believe me, just ask her

  6. #6
    Bakruptcy fraud

  7. #7
    six months later..what are the best 5 year rates now? 3.6% fixed? Sometime next year we might see people with 2.30% 5 year fixed rates renewing without any option lower than 4%. How many people can afford an extra $400/month to their monthly payments when their mortgages renew?

  8. #8
    Quote Originally Posted by wonkyknee View Post
    six months later..what are the best 5 year rates now? 3.6% fixed? Sometime next year we might see people with 2.30% 5 year fixed rates renewing without any option lower than 4%. How many people can afford an extra $400/month to their monthly payments when their mortgages renew?
    https://www.cbc.ca/news/business/cbc...gage-1.4864965


    Think of the children -> http://www.numberofabortions.com/
    I want you to point your finger at me. I want you to call me names.

  9. #9
    its not like people haven't been warned over and over again. Fear of missing out? Missing what. At 4.5% 5 year rates home prices will have reverted to the same price from 10 years ago in many areas. I've already seen 2.4 million dollar homes drop to 1.9million in very good areas outside the center core. I've seen 1.6 million dollar homes drop to 1.2 million. I've seen 1.3 million dollar townhouses drop to $900 000(and less). 2-3 more quarter point increases?

    Where are all those immigrants coming into Toronto willing to pay anything for a home?
    Fear of missing out? It will be Fear of Not Getting out soon enough.
    Will my children ever be able to afford a home? They had a better chance before you took equity out of your home to help them with a downpayment to buy at inflated prices. Now you're both [email protected]

    Dot com?
    Bit coin?....

  10. #10
    Vancouver is feeling the pain first.
    https://twitter.com/FIVRE604/status/1055853395989356544

    "After this week...dividend paying equities are on sale. In one year #vanre will be much cheaper.

    My investor clients have been selling in Vancouver for over two years except with rare cash flow. We are now in the panic stage." - Calum W.M. Ross

    I suspect the GTA will feel the reckoning soon enough. Though "all real estate is local" and both markets should theoretically behave in different ways, a housing pattern has emerged that is very consistent over a 3+ year period that suggests the GTA mirrors VanCity but is 8 months behind:

    https://sixhousingsense.com/2018/10/...ing-timelines/

    https://sixhousingsense.com/2018/10/...stings-ratios/

    Even for those not over-leveraged in real estate, I would advise to horde liquid cash, as there may be tough times ahead when all the smoke clears.


    Think of the children -> http://www.numberofabortions.com/
    I want you to point your finger at me. I want you to call me names.

  11. #11
    By contrast, the condo market may see another short term surge in price growth:
    https://sixhousingsense.com/2018/10/...-condo-market/


    Think of the children -> http://www.numberofabortions.com/
    I want you to point your finger at me. I want you to call me names.

  12. #12
    Quote Originally Posted by Smallcock View Post
    By contrast, the condo market may see another short term surge in price growth:
    https://sixhousingsense.com/2018/10/...-condo-market/
    I suppose. based solely on affordability and stupidity. fools rush in and/or capitulate. I don't know how many times I've heard, I could have bought 2-3 or 5 years ago. I might as well just buy now or I never will. They could go up a little higher and then come down hard. In real estate the holding time period is generally longer, but it just means like with detached homes, people will just find one day that they owned the property for ten years or so and its gone nowhere or lost. it won't be a crash just a realization that it was a bad investment one day.

  13. #13
    This market is dead these idiots have 5 or 6 hundred thousand mortgages, never mind the rest of there debt credit cards car loans second mortgages. They can t afford a extra couple of hundred dollars in bills a month but live in a shitty 700k condo in toronto. Good luck.

  14. #14
    I know it has been clear that consumer interest rates had to rise, but given the BoC rate held steady I anticipated there would be some respite in the banks rate increases.
    https://www.bankofcanada.ca/2018/12/...se-2018-12-05/

  15. #15
    Never Been Justly Banned
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    You guys are getting fucked by your oligopoly banking system.

    https://www.wellsfargo.com/mortgage/rates/


    At the bottom of all the tributes paid to democracy, is the little man, walking into the little booth, with a little pencil, making a little cross on a little bit of paper - no amount of rhetoric or voluminous discussion can possibly diminish the overwhelming importance of the point.

  16. #16
    Quote Originally Posted by onthebottom View Post
    You guys are getting fucked by your oligopoly banking system.

    https://www.wellsfargo.com/mortgage/rates/
    Your using Wells Fargo as an example of good banking?

    Really?

    Does over 2 million acts of fraud mean nothing?

    And I suppose the 4 million foreclosures overall due to the crisis show a healthy banking system?

    That's funny.
    It is my hope that Bernie Sanders will run as an independent candidate in the 2020 presidential election.

    Well I guess Bver is a Trump Supporter..........

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