With 5-year yields rising again today, TD is the first bank to hike fixed mortgage rates.
TD is lifting its 5-year rates by 1/4 percentage point, effective tomorrow. The bank’s other fixed rates are also headed higher.
TD’s advertised “special offer” rate is now 4.39% while its 5-year posted rate has jumped to 5.44%. Odds are, we’ll see the market shift to 3.99%-4.09% (or thereabouts) for full-featured deeply-discounted 5-year fixed rates.
The other banks are expected to follow TD’s lead soon. The Big 5 last raised rates around December 15, but at that time they left posted rates as is. If the other banks match this new 5.44% posted rate, that means the qualification rate will likely rise on Monday.
Hi Rob,
do you have a simple rule of thumb on how much qualifying income needs to rise or house price needs to drop to offset every quarter point increase in the qualifying rate?
Thanks
Hi RR,
If a homeowner wants a $300,000 mortgage, for example, then a 1/4% hike in the qualifying rate (i.e., from 5.19% to 5.44%) means income must rise $1,335 (~2.5%) for the buyer to qualify.
Alternatively, they could reduce their mortgage amount to ~$292,000 (~$8000 less) and still qualify.
That assumes:
* Excellent credit
* A fully qualifying borrower
* 44% TDS
* 35-year amortization
* 1% annual property taxes
* $100 heat
* No condo fees
* A 3.15% insurance premium
* No other debts or obligations
This example reflects the theoretical maximum someone could qualify for. The actual maximum is often lower, depending on the client and lender.
Cheers…
Hi,
If you would like a calculator that will work this out for you send me an email at sslinn@shaw.ca
Thanks,
Shayne
hi Rob
Do you know any lender who
1. gives competitive rates as well as
2 will fund the closing costs over and above the cost of the home
Im thinking its time to convert my var to fixed. Im torn between 3yr @ 3.69% or 5yr @ 3.99%. Anyone care to post why they think one might be better than the other?
It is a little about your risk tolerance and where you think rates will be in the future.
5 years of security versus 3.
If you take the 3 year term and are able to renew for 2 additional years under 4.52% you will beat the 5 year rate.
does this mean variable rates will not be as discounted as well?
Hi vp10,
Yes, there are a few. The best best is to email a mortgage planner (or us if you like). Then a specific recommendation can be made.
Cheers…
Rob
Getting my 5 year 3.44/35 year funds forwarded tommorow from BMO. Keys at noon yay.
Locked in at the best possible time.
hi rob
i want to get the benefit of rrsp first time home buyer and lowest interest rate for mortgage with the closing cost included in one mortgage payment
if i get a pre approval b4 mar17 and close in sep will i still get 35 yrs amortization?
See point #2 here: https://canadianmortgagetrends.com/canadian_mortgage_trends/2011/01/mortgage-rule-change-qa.html
Cheers…
so TD is upping fixed mortgage rates eh? thanx for the heads up….
the good ol greedy canadian banks…why am I not surprised….death, taxes and money grubbing canadian banks looking to squeeze a few extra bucks outta us
Nick, What are you talking about? th emortgage prices that you have seen for the past few months are insane! there are no profits or spreads in today’s mortgage rates.
Your cost of funds are 2.65-2.75 and at 3.99 there is nothing left! consumers will not see rates like these for years to come!!