After cutting advertised rates last week, TD Canada Trust has followed RBC’s lead in lifting rates back up.
Like RBC, TD is raising its advertised:
These changes take effect Tuesday, June 11. And if history is a guide, they’ll likely be matched by most other major banks.
These hikes are being prompted by rocketing bond yields. The 5-year yield soared to a 13-month high on Monday, closing at 1.63%. That’s a climb of almost 1/2 percentage point in just over a month. This raises lenders’ fixed-rate funding costs materially, compelling them to pass along higher rates to borrowers.
Neither RBC nor TD announced any changes to their 5-year posted rates. As a result, the benchmark qualification rate may stay as-is. (The benchmark rate, currently 5.14%, is used to qualify borrowers for variable rates and 1- to 4-year fixed terms. The higher it goes, the harder it is to get approved—at least for folks with tight debt ratios.)
At the moment, there are still sub-3% five-year fixed rates available for live deals (i.e., deals with firm closing dates). But pre-approvals below 3% are getting tougher to find by the day.
Rob McLister, CMT
Last modified: April 26, 2014
2% bond, here we come.
The banks are just testing the market again. This rate hike won’t last long. They will be forced to lower rates again when people shop elsewhere. Supply and demand always win the day.
@ Kevin
Although, I don’t understand this game as I am just first time shopper looking in the market.
But a reason is mentioned for rate hike, again I don’t understand what
it means that – “The 5-year yield closed at 1.63%. i.e. a climb of almost 1/2%”.
So I wonder how your answer is valid which is just a statement instead of saying counter argument to the reason mentioned :) ?
I don’t understand the market game plan but just concerned if rates goes up, I, as consumer, would be suffer.