Canadian mortgage rates are beginning to inch higher for the first time since before the COVID-19 crisis, reflecting the spike in long-term bond yields, but with home loans still languishing around historically low levels the modest hike is unlikely to slow the red-hot housing market.
Mortgage rates had been trending lower in Canada since the Bank of Canada slashed its benchmark interest rate last March to a record low of 0.25% to support the economy during the pandemic. So the move-up in mortgage rates is a sea change for home buyers, providing a sense that a bottom could be in place.
TD Bank and National Bank of Canada told Reuters they have raised rates on at least some mortgage products, but Royal Bank of Canada, the country's biggest lender, said it has not raised mortgage rates recently.The low mortgage rates, pent-up demand and fewer listings amid the pandemic have lit a fire under the Canadian housing market.
"I would say the rise in interest rates comes a little bit earlier than anticipated, but it also came alongside some better than anticipated news" on the economy, said Royce Mendes, senior economist at CIBC Capital Markets.
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