When home lending rates hit record lows last summer, some mortgage brokers warned that fixed mortgage rates were starting to pick up, though only slightly.
James Laird, co-founder of ratehub, a financial products comparison website, and President of canwise financial, a mortgage brokerage, said that as the real estate market prepared for the busy spring market, lending institutions across the country announced a 0.1-0.2 percentage point increase in fixed interest rates.
“Banks that have not yet announced fixed rate adjustments are expected to do so by the end of this week,” Laird said in an email
As of February 24, the lowest five-year fixed interest rate offered on ratehub, also through canwise financial, was 1.39%. “We expect this rate to reach 1.54 per cent by the end of this week,” Laird said
According to the calculation provided by ratehub, for the purchase of a house with a value of 500000 yuan, a 10% down payment and 25-year installment payment, the increase in interest rate will mean an increase of 32 yuan in monthly loan repayment, from 1831 yuan to 1863 yuan.
Laird said the cost increase is small, but for borrowers who are based on obtaining transactions or worried that interest rates may rise further, the current interest rate can be ensured through the pre approval of mortgage loans.
Mortgage broker rob mclister has also been warning that fixed mortgage rates are turning. He said interest rates rose as investors began to feel optimistic about the economic outlook and were increasingly worried about inflation.
Floating interest rates tend to rise or fall with the changes of benchmark interest rates set by the Bank of Canada, while fixed lending rates are usually affected by the bond market, and the state of the bond market will affect the borrowing costs of the lenders themselves.
McChrystal also wrote that although Canada’s big banks have yet to act, it is only a matter of time before bond yields continue to rise.
Moreover, for now, the Bank of Canada has almost reassured those who choose floating rates. In a recent speech, the governor of the Bank of Canada, tiff macklem, said the central bank remained committed to keeping the benchmark interest rate at its current level until the economy regained its footing.
According to Statistics Canada, Canada will add 118 billion yuan of mortgage debt in 2020, bringing the total amount of mortgage loans to 1.7 trillion yuan. This is a 7.6% annual growth rate, the fastest since 2010. On the other hand, non mortgage debt decreased by 12 billion yuan, or 1.5%.