Tuesday

Canadian residential mortgage rates rising

Mortgage rates in Canada are heading higher as fears of inflation grips the bond markets. Canadians received more proof yesterday of the global credit crunch hitting home after this country's biggest banks began hiking their residential mortgage rates in an effort to recoup higher funding costs from their customers. In Canada this week a number of banks raised mortgage rates, and it's a matter of days before others follow. Effective Friday, a five-year mortgage increases by .35 of a percentage point to 7.2 per cent, while a three-year closed term rises by the same amount to 7.05 per cent. A one-year closed mortgage loan falls by .3 of a percentage point to 6.35 per cent. The interest rates on mortgages and other short-term borrowing are set based on the price of bonds. With lower demand for bonds and fears of inflation, rates have to rise to lure investors. Other interest rates in the economy - from consumer and car loans to mortgage rates tied to the prime rate - are affected by the Bank of Canada trend-setting rate, which is expected to fall or remain stable over the next few months at least.

3 comments:

Mortgage Modification said...

Although a loan does not start out as income to the borrower, it becomes income to the borrower if the borrower is discharged of indebtedness.

Joe Aldeguer said...

Make sure to know the state of your finances before contacting your lender. Determine how much income you're bringing in each month, how much you're paying in bills and where you can cut costs. Just a tip!

Jules Seaman said...

It will be interesting to see how these rates affect the Vancouver real estate market.

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