TD Ups 5-year Rate, Cuts 2- & 3-Year Rates

TD-Canada-Trust-BankTD Canada Trust is raising its posted 5-year fixed rate by 10 basis points to 5.29%.

Meanwhile, its 2- and 3-year rates are dropping 3/10ths of a percentage point. (See: TD’s Release)

TD last changed its 5-year rate two weeks ago when it dropped to 5.19%. Since then, the 5-year bond yield — which guides fixed rates most of the time—has been flat. As a result, today’s increase may surprise some.

Unfortunately, credit spreads have inflated a bit with the bond market pricing in a near-term default by Greece. In addition, investors have been demanding slightly higher returns to buy Canadian mortgage-backed securities. These realities and the related market volatility are raising lenders’ funding costs. That may be at least partly responsible for TD’s move today.

We’ll keep an eye out to see if the other Big 6 follow TD’s lead.

In the meantime, as always, don’t procrastinate if you need a new mortgage in the next 180 days. The unexpected can happen so get rate hold to minimize rate risk.


Rob McLister, CMT

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