TD, Royal Bank both raise their fixed mortgage rates

27 Apr 2018 | Canada
TD, Royal Bank both raise their fixed mortgage rates

Two of Canada's biggest lenders have hiked their benchmark mortgage rates, with Toronto-Dominion Bank raising its posted five-year fixed rate by 45 hundredths of a percentage point and Royal Bank moving its up by 20.

TD moved this week to raise five of its fixed-rate mortgages by between 10 and 50 hundredths of a percentage point.

Starting now:

  • TD's two-year closed rate is 3.44 per cent, up from 3.34 previously.

  • TD's three-year closed rate is 3.59 per cent, up from 3.49 previously.

  • TD's benchmark five-year closed rate is 5.59 per cent, up from 5.14 per cent.

  • TD's six-year closed rate is 5.64 per cent, up from 5.14 per cent previously.

  • TD's seven-year closed rate is  5.80 per cent, up from 5.3 per cent previously.

"Adjusting our rates is not a decision we take lightly," TD spokesperson Julie Bellissimo told News in a statement. "Even with this change, lending rates remain competitive and at historically low levels."

Which means even if you can negotiate a better rate — and most people do — your lender is obligated to test your ability to pay back the loan as though your mortgage rate is that high.

And if you don't pass the test, the bank can't loan you the money.

After TD raised its rates, Royal Bank made a change of its own, boosting fixed-rate mortgages of between one and four years by 15 hundredths of a point, and five-to-10-year loans by 20 hundredths of a point as of Monday.

For a benchmark five-year fixed-rate loan, that means Royal's new rate will be 5.34 per cent, as of April 30.

Among Canada's three other big banks, Scotia and BMO currently have a five-year rate of 5.14 per cent, while CIBC is at 4.99.

Now that two of the banks have moved, would-be homeowners should expect more of the same from other lenders, author and financial advisor Hilliard MacBeth said in an interview Friday. "Seems to me that once one of them moves, they all seem to move," he said. "I've never seen it any other way."

While still low by historical standards, at almost six per cent, MacBeth says rates are now approaching the level where the interest costs double the price of the home over 25 years.