Tuesday, July 5, 2011

Canadian Mortgage Rates on the Rise. Royal Bank, TD, and Laurentian Charging Customers More Interest.

It is getting more expensive to buy a house in Canada as mortgage rates in this country are rising. Amidst inflation fears Royal Bank (TSE: RY), TD (TSE: TD), and Laurentian Bank (TSE: LB) are raising their rates by 0.10 percentage points. 1/10th of a percentage point does not sound like a significant amount, but given the lengthy duration of many Canadian mortgages, small amounts make a big difference over time.

Because of the clout of TD and Royal in particular, their raising of mortgage rates will be an indication to the other big banks to do the same. BMO, CIBC, Scotiabank, and National should not be too far behind.

For those Canadians currently on variable rate mortgages, you will be paying more interest soon enough when the Bank of Canada eventually indicates that it will raise its benchmark. For those of you on fixed-terms, you will not notice a rate change until your current mortgage term expires and you have to renew it at current market rates. So for everyone sitting on variable mortgages, be careful, inflation might be biting at your heels and compelling the banks to charge you a little more money every month.

Happy Investing, and for a short video with this news:

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