Just nine days after RBC cut posted rates to new lows, followed by a couple of other lenders, we have three lenders who have raised their fixed rates without warning. TD is raising fixed rates 15-25 basis points, effective tomorrow.
First National has raised their 5-yr fixed rate to 5.79%. RIGHT MORTGAGE is increasing their 5 yr fixed rate to 3.79% at midnight tonight. This is the first such increase in almost six months.
Other banks typically follow competitors’ posted rate moves within 1-2 days. We will know in the next few days if the rest will follow this time.
Not having seen or heard any reason for this increase, I as a simple person must try to rationalize this move with some logic so I can try and predict what will happen next. If one was to play "Devil's Advocate" he might remember a trend in early 90's. After the scare of high interest rates in 1981-82, people were a little shell-shocked. Once rates had settled in the more acceptable traditional 8-10% range and the market settled down, buyers could sit a little and look before making the decision to buy. At that time I was a Prince George Realtor and I noticed that whenever we had a slight jump in interest rates, many of the buyers and sellers who had been sitting on the fence suddenly made a move to buy or sell. The fear of loss of the available current rates motivated people to do something.
Now, I am not for a minute suggesting that anyone else might notice the same trend and try and manipulate the market. I am only saying, it will be interesting to see what effect these increases today have on the market:
• locking in of current variable rate mortgages to fixed rates now rather than gambling and waiting for the rates to continue their previous descent
• deciding to make an offer to buy a property and take these rates today rather than risk the possibility of higher rates tomorrow
• deciding to accept an offer on the table to sell a property that might be subject to higher rates of financing tomorrow
• fence sitters who have been thinking about re-financing and are now motivated to do so
This all coming at a time when real estate sales and rates have been dropping steadily since April. And there isn't any news this should change in the near future.
Once again, it is my duty to give notice to those who are currently on variable rate mortgages that there is a pending increase coming to fixed rates (not variable rates) for those who can't sleep at night worrying about the fear of ever increasing rates... it might be time to have a talk about your options.
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