Jumping The Gun? Banks Raise Rates to Their Benefit
The author is a Senior BC mortgage broker who is interested in the factors that drive the market.
The trend in interest rates is rising but I have to wonder if the banks are pushing it along. Seems they are more interested in their financial results instead of providing competitive Vancouver mortgage rates.
The banks just pushed out a huge bond issue paying 4.11%. This issue will be used to fund mortgages. With the latest increase in the posted Big Bank five year rate at 6.25% that gives the Big Banks a whopping 35% spread.
Here’s the deal. The banks know that 90% of consumers just sign the renewal letter. Do you think that the banks are going to give their best rate in those letters? I think not.
After a pair of increases the posted five year rate is only a ½ % point below the average for the decade. These rate increases are a very fast ramp up on fixed rates for what was supposed to be a long slow path upward for BC mortgage rates.
So much for the early phase of an increase in BC mortgage rates, the Bank of Canada hasn’t even begun to increase the rate.? All I can say is good for the bank’s returns…bad for the consumers who have to pay their mortgage.
The Big Banks move is a grab at insuring fat returns when the renewals from all those buyers in the last five years begin to renew their mortgages.
Mortgage rates are still near historical lows for BC mortgage broker quotes. Now is the time to refinance your mortgage or consolidate debt. Bad credit mortgage applications are handled with expertise.
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