Major Banks Raise Fixed Mortgage Rates

As expected prior to an increase in the Canada prime rate, the major banks have raised interest rates on fixed mortgages.

“CIBC and National Bank followed in the footsteps of other major Canadian banks Tuesday raising the rates on residential fixed mortgages.

Similar to RBC and TD Canada Trust, CIBC and National Bank hiked their three, four and five-year closed mortgages by 20, 40 and 60 basis points respectively.

A three-year mortgage will now come coupled with a 4.35% interest rate, a four-year at 5.34% and the benchmark five-year fixed mortgage at 5.85% at both banks. National Bank is offering a discount on its five-year rate for a limited time.

Mortgage specialists say homeowners risk debt loads they can’t handle as rates come off historic lows. Real estate watchers say the increases will help cool at Canada’s red-hot property market.

Economists say the fairly aggressive rate hikes are in response to the rallying bond market and suggestions by the Bank of Canada that its overnight lending rate could rise sooner than expected. Inflation has outpaced estimates in recent months and the central bank’s pledge to keep interest rates low has been conditional upon core inflation hovering around or below 2%.”

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