TD Bank raised the interest rate it charges clients for variable-rate mortgages in the midst of the progressions to the mortgage insurance rules declared by Ottawa a month ago.
The huge Canadian bank expanded its TD Mortgage Prime rate to 2.85% from 2.7%, successful Tuesday.
Clients with fixed-rate mortgages were unaffected by the change and TD’s prime rate for different items with a variable interest rate, for example, lines of credit, were also not affected.
“We regularly review our rates and adjust them based on a number of factors, including the cost that TD pays to fund mortgages,” the bank said. “Increasing our rates is not a decision we take lightly. We consider the impact on our customers before proceeding with any rate change, and we communicate directly with customers whose loans or mortgages are affected.”
James Laird, President of mortgage brokerage CanWise Financial and co-founder of rate-comparing site RateHub.ca, said the progressions are going to decrease the sorts of mortgages that will be qualified for portfolio insurance drastically toward the end of November.
“That being said, there’s been some very major changes to the mortgage industry,” he said in an interview. “This could be in anticipation of higher funding costs when the new rules come in.”
That implies in under a month, numerous lenders won’t have the capacity to cut their costs by bundling their mortgages together and offering them to investors. That will raise the cost of mortgages all around, particularly for non-bank lenders.
So TD moving to raise their mortgage rates could be a way of getting out ahead of those changes, Laird said.
“Without being able to ensure those mortgages,” Laird said “we can point to that as a likely reason for today’s news.”