{"id":15327,"date":"2020-04-10T10:10:00","date_gmt":"2020-04-10T17:10:00","guid":{"rendered":"http:\/\/www.roryc.ca\/blog\/?p=15327"},"modified":"2020-03-24T11:33:15","modified_gmt":"2020-03-24T18:33:15","slug":"fixed-mortgage-rates-hiked-interest-rates-on-new-mortgages-increasing","status":"publish","type":"post","link":"https:\/\/www.roryc.ca\/blog\/2020\/04\/fixed-mortgage-rates-hiked-interest-rates-on-new-mortgages-increasing\/","title":{"rendered":"Fixed Mortgage Rates Hiked. Interest Rates on New Mortgages Increasing"},"content":{"rendered":"<p style=\"text-align: justify;\">With the Bank of Canada dropping its overnight rate by a full percentage point this month in response to the COVID-19 pandemic, it would seem to be a great time to shop for a new mortgage.<\/p>\n<p style=\"text-align: justify;\">Not so, according to mortgage experts. In fact, advertised interest rates for new mortgage applications climbed significantly last week. In its March 19 update, mortgage comparison website RateSpy.com wrote as an example that TD Bank had just increased its advertised rates :<\/p>\n<p style=\"text-align: justify;\"><em>\u2022 three-year fixed : from 2.69% to 2.89%<\/em><br \/>\n<em>\u2022 five-year fixed (high ratio) : from 2.69% to 2.79%<\/em><br \/>\n<em>\u2022 five-year variable : from 2.85% to 2.95% (no discount on the bank\u2019s prime lending rate)<\/em><\/p>\n<p style=\"text-align: justify;\">Alisa Aragon, mortgage broker with Dominion Lending Centres Mountain View, told Glacier Media in an interview March 20, \u201cLenders started increasing rates last Friday [March 13, the same day that the Bank of Canada made its emergency cut to the overnight interest rate]. That includes major lenders such as Scotiabank, TD, RBC. They\u2019ve also been reducing variable-rate mortgage discounts on the prime rate, which is currently 2.95%, so the discount on most variable rates is barely anything. In the future, we could see no discounts at all.\u201d<\/p>\n<p style=\"text-align: justify;\">She added, \u201cThe fixed rates are usually connected to the bond market, but because banks need liquidity right now, they\u2019re increasing the rates.\u201d The bond market had previously dropped in line with the central bank\u2019s interest rate, but has also rebounded over the past couple of days.<\/p>\n<p style=\"text-align: justify;\">Liquidity for the banks is a key issue for the federal government right now, which announced March 20 that it is introducing \u201cchanges will help provide stable funding and liquidity to financial institutions and mortgage lenders and support continued lending to Canadian businesses and consumers.\u201d<\/p>\n<p style=\"text-align: justify;\">This follows an announcement by the Ministry of Finance that it is launching \u201ca $50 billion Insured Mortgage Purchase Program (IMPP) &#8230;.. The amendments allow mortgage lenders to pool previously uninsured mortgages into National Housing Act Mortgage-Backed Securities for CMHC to purchase these securities through the IMPP. The impact of this measure will provide financial institutions with more liquidity. This, in turn, will allow financial institutions to continue lending to businesses as well as individuals, while assisting customers who face hardship and need flexibility, on a case by case basis.\u201d<\/p>\n<p style=\"text-align: justify;\">By insuring previously uninsured mortgages, the government is essentially taking on the risk associated with those loans, freeing up banks\u2019 balance sheets to provide more liquidity. The moves are intended to support banks while they offer such programs as six-month deferrals of mortgage payments to customers facing financial hardship due to the COVID-19 pandemic.<\/p>\n<p style=\"text-align: justify;\">However, Aragon said that the program would not necessarily prevent banks from raising mortgage interest rates. \u201cIt depends on the bank\u2019s balance sheets, every bank is different,\u201d she said. \u201cThese are unprecedented times.\u201d<\/p>\n<p style=\"text-align: justify;\">Even though rates for new mortgages are currently rising, applicants are rushing to get a mortgage on the back of news that the Bank of Canada has slashed its overnight rate.<\/p>\n<p style=\"text-align: justify;\">RateSpy\u2019s March 20 update added, \u201cNearly every long-time mortgage broker we\u2019ve talked to is swamped, with some saying they\u2019re having their highest application volume ever for a March.\u201d<\/p>\n<p style=\"text-align: justify;\">Aragon is one such busy mortgage professional. She told Glacier Media she is also fielding countless calls from people who are asking about possible mortgage deferrals, even when they haven\u2019t lost their jobs. She added that some are hoping to stop paying their mortgages so they can use the money to invest in the stock market while it is depressed. \u201cThat\u2019s not how you do it,\u201d she added. \u201cThese deferral programs are really for people who are struggling financially due to the pandemic, and those customers will be required to provide proof of hardship.\u201d<\/p>\n<p style=\"text-align: justify;\">RateSpy\u2019s March 20 update confirmed this trend, saying, \u201cWe\u2019re hearing of cases where people are using HELOCs [home equity line of credit] to buy stocks. These are presumably (hopefully) well-qualified, risk-tolerant clients with financial safety nets. It\u2019s definitely not a strategy for the overwhelming majority.\u201d<\/p>\n<p style=\"text-align: justify;\"><a href=\"https:\/\/biv.com\/article\/2020\/03\/interest-rates-new-mortgages-increasing-despite-bank-canada-rate-drop\" target=\"_blank\" rel=\"noopener noreferrer\">Interest Rates on New Mortgages Increasing, Despite Bank of Canada Rate Drop<\/a> by Joannah Connolly | Glacier Media Real Estate | BIV<\/p>\n","protected":false},"excerpt":{"rendered":"<p>With the Bank of Canada dropping its overnight rate by a full percentage point this month in response to the COVID-19 pandemic, it would seem to be a great time &hellip; [<a href=\"https:\/\/www.roryc.ca\/blog\/2020\/04\/fixed-mortgage-rates-hiked-interest-rates-on-new-mortgages-increasing\/\">read more<\/a>]<\/p>\n","protected":false},"author":3,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[9],"tags":[],"class_list":["post-15327","post","type-post","status-publish","format-standard","hentry","category-mortgage"],"yoast_head":"<!-- This site is optimized with the Yoast SEO plugin v27.4 - https:\/\/yoast.com\/product\/yoast-seo-wordpress\/ -->\n<title>Fixed Mortgage Rates Hiked. 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