benchmark mortgage ratesTD Bank first, then National Bank and Royal Bank of Canada, then CIBC and finally Bank of Montreal, have raised their benchmark mortgage rates for 5-year fixed-rate mortgages.

On April 25, TD Bank increased its posted rate for five-year fixed mortgages to 5.59 per cent from 5.14 per cent.

Meanwhile, CIBC, Royal Bank and National Bank raised the posted rate for a five-year fixed mortgage on by 10-30 basis points (0.10% – 0.30%).

The mortgage professionals find the Td Bank’s increase of 45 basis points unusual, as the benchmark rate hasn’t seen a similar jump jump since early 2010.

Although benchmark mortgage rates are increasing, the rates these two banks offer to their clients remain the same at this time. However, this increase may prompt the Bank of Canada to raise its benchmark rate. Home buyers should know by now that the Bank of Canada benchmark rate is used in the so-called stress test.

It will be interesting to see if the BoC raises the Mortgage Qualifying Rate this Thursday, when the BoC next resets this important rate?

Recent introduction of the stress testing has effectively decreased Canadians’ purchasing power by as much as 20%. This is particularly hard on first-time buyers who are already struggling to come up with large down payments, especially in the major urban areas.

This stress applies not only to mortgages when purchasing a property, it also now applies for home owners who are looking to switch their mortgage to a different lender. Are the big banks trying to artificially increase the Mortgage Qualifying Rate simply to make it harder for people to switch to a different lender?

Please feel free to give me a call, I’d be happy to work with you in sourcing the best mortgage designed for YOU. Using an experienced mortgage broker is your best bet in navigating this complicated and often confusing area of finance.

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Your trusted mortgage advisor for life,

Boris MahovacBoris Mahovac

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