TD Bank Raises Prime Rate
Toronto Dominion Bank, one of the nation’s big banks, announced that it is changing its mortgage rates, including increasing their prime rate from 2.7 per cent to 2.85 per cent. The move is in anticipation of higher lending costs sparked by the recent changes in mortgage rules.
The increase applies only to the TD Mortgage Prime rate, and will not impact anyone who holds a fixed-rate mortgage. TD Mortgage Prime is the base rate for variable interest rate mortgages; a rate which has remained steady for the past 15 months.
This increase comes less than a month after the federal government announced new mortgage rules. One of these new mortgage rules means that consumers with fixed-rate mortgages of five years or longer backed by the government must qualify based at the Bank of Canada’s benchmark five-year rate of 4.64 per cent.
The news has been received with much concern from brokers who fear that the big banks could be able to influence the market by altering their posted rates. The Bank of Canada’s benchmark rate is closely tied to the rates posted by the big banks. The fear is that other big banks follow suit in an attempt to impact the BoC’s benchmark rate, essentially meaning they can pick and choose which home buyers will qualify for an insured mortgage.