Discount mortgages dry up as Canadian borrowers face tough test

Reblogged from The Globe and Mail, Tim Shufelt

The discount mortgages that stoked the Canadian housing boom are disappearing, increasing the likelihood of a correction in home values.

On Thursday, Royal Bank of Canada will hike its five-year fixed-rate mortgage to 3.89 per cent, one day after the Bank of Montreal raised its rate to 3.79 per cent. The other major lenders are all moving in the same direction.

The increases mean the cost of a new fixed-rate mortgage has climbed by more than a third in five months, signalling what could be the beginning of the end of ultra-cheap credit in Canada – and the start of fiscal pain for consumers who have overburdened themselves with debt.

“I think this is the real thing,” said Benjamin Tal, deputy chief economist at CIBC World Markets. “This is the end of extremely low interest rates. They’re simply unsustainable.”

Read More … 586 more words

Advertisements

2 responses to “Discount mortgages dry up as Canadian borrowers face tough test

  1. Pingback: Why You Might be Denied for a Mortgage – 3 Most Common Reasons | Kentucky First Time Home Buyer Mortgage Loan·

  2. Pingback: Canadian House Prices ‘Bubbly,’ The Economist Says As Feds Mull More Mortgage Changes « Olduvaiblog: Musings on the coming collapse·

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out / Change )

Twitter picture

You are commenting using your Twitter account. Log Out / Change )

Facebook photo

You are commenting using your Facebook account. Log Out / Change )

Google+ photo

You are commenting using your Google+ account. Log Out / Change )

Connecting to %s