CMHC's Announcement this Week & the Possible Increase in Rates to Follow
This week CMHC (Canada Mortgage Housing Corporation) announced it was going to cap the amount of insurable mortgages available to banks & lenders to 350 million each. This is not a lot for big lenders like RBC, CIBC and a couple other large banks. Having access to this insurance allows lenders and banks alike access to cheaper cash to lend out to borrowers. Once that is tapped which could be very easy for the larger lenders it may drive borrowing costs up. A prediction within the Globe & Mail article below states we could see rates go up another .20 to .65%. Two months ago the lowest rate for a 5 year fixed term was 2.79% it's now 3.39% and could now go over 4%. If this happens it will probably happen to the big lenders, like the banks first, as they would be the first to tap into the maximum insurance allowable, then some others may follow.
I would strongly advise anyone who is thinking of purchasing in the next few months or whose mortgage is coming up for renewal to get a rate held today! I can hold rates for up to 120 days with most lenders.
Here's the article: http://www.theglobeandmail.com/report-on-business/economy/housing/cmhc-moves-to-take-steam-out-of-housing-market/article13607534/