Mortgage Demand Plummets as Rates Spike

The 30-year fixed rate hasn’t been this high since January.

In the wake of Donald Trump’s surprise win at the ballot box, there have been heated demonstrations as well as celebrations, turbulence in the bond markets-and higher mortgage rates.

A breakdown of the figures shows that following the Bank of England’s decision to lower the Bank Base Rate to 0.25% in August, mortgage rates fell across the board.

Generally speaking, the strategy for those already in the market to buy, would be to lock-in your rate with a pre-approval. Now.

The 15-year fixed-rate mortgage, popular with homeowners who are refinancing, advanced to 3.14 per cent from 2.88 per cent.

The average loan-to-value for new mortgages this year was 68 per cent, and 80 per cent for first-time buyers.

The move is in line with rival Toronto-Dominion who increased their mortgage prime rate 0.15 points to 2.85 per cent in early November.

“International funding costs are rising, which is the fallout from the ‘Trump effect, ‘” said Martin North, principal of Digital Finance Analytics (DFA), a boutique research, analysis, and consulting firm that provides advisory services to financial services companies.

The 5/1 Adjustable Rate Mortgage interest rates at HSBC have been offered at 3.5% yielding an April of 3.825% to start. “Most people were certainly expecting rates to increase even before the election”. Industry-watchers say it’s still too soon to tell what impact the new administration will have on interest rates in the long term.

He said the bond yields are also going up because the president-elect is expected to raise deficit spending.

“You typically see rates go up after every election”. Thornberg said a change could loosen tight regulations, increasing a borrowers’ access to credit and giving a needed boost to the mortgage market.

The recent changes to Canadian mortgage rates were in response to investors in the global bond and SWAP markets.

“The prospect of higher inflation in future years has bond investors scrambling for the exits”, said Greg McBride, a chief financial analyst with the financial website Bankrate.com.

Low interest rates have allowed home buyers to purchase more expensive homes than they would otherwise be able to afford. Rates on a 30-year FHA-backed fixed-rate loan rose from 3.61% to 3.73%, the highest level since April.