Big 5 Bank Raises Prime Lending Rate

November 1, 2016

|

Shawn Mooney | Bayfield Mortgage Professionals Ltd.

TD Canada Trust announced today it would be increasing it's prime lending rate to 2.85% from 2.70%. This move was unprovoked as the Bank of Canada recently left its overnight lending rate the same as it's been for a long time.  

This interest rate hike effects Variable rate mortgages and home equity lines of credit (secured line of credit). So let's say you had a variable rate mortgage with a rate of prime -0.5%, your rate would have been 2.70% - 0.5% working out to 2.20%. With TD's changes your rate will go up to 2.85% (new prime) - 0.5% working out to 2.35%, an increase of 0.15%. 

This move represents in my opinion the single biggest challenge to variable rates and home equity lines of credit. The banks have the ability to adjust their prime lending rate whenever it suits them. It makes this rate very unpredictable. This move is also an invitation by other lenders to do the same. I would not be surprised in the least of in the next few days you saw that others followed suit. It is possible they all will. I have never seen an environment where the prime lending rate was different among the lenders. 

Fixed rates are awesome right now, check them out here. It may be a good time to consider locking in to a fixed rate. Fixed rate mortgages are not subject to the same rules so you don't ever have to worry about the lender increasing your rate during the term. If you are considering switching to a fixed rate, don't except the first rate offered. Do your research to make sure there isn't better out there. One of the best features to the variable rate is that you can get out of most of them with a penalty of 3 months simple interest so there really isn't any surprises. 

As always, you can keep updated on current interest rates at www.shawnmooney.com/rates

Shawn Mooney |Bayfield Mortgage Professionals Ltd.

Broker of Record

Your Mortgage Broker for Life

Bus. # 403-945-8769 | Mobile # 403-828-1838

Email: mortgages@shawnmooney.com

Website: www.shawnmooney.com