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Why Are Mortgage Rates Rising?

Steve Huebl
Publication date:
March 16, 2020
Article Summary: 

Why Are Mortgage Rates Rising?

The COVID-19 pandemic and plummeting oil prices have caused mortgage rates to plummet to multi-year lows, but now some lenders are starting to raise rates. Scotiabank, for example, raised its published 5-year closed variable rate 60 percentage points on Saturday, from 3.45% to 4.05%. Other lenders have also been slashing their discounts from prime by anywhere from 20 up to 75 basis points. This has caused lenders to be concerned about liquidity and rising defaults, according to observers. The Office of the Superintendent of Financial Institutions (OSFI) announced on Friday that it is lowering the capital requirements for banks, which would free up an additional $300 billion of lending capacity.

The Bank of Canada's emergency rate cut on Friday is still expected to bring Canada's overnight lending rate down to 0.25%. This has caused banks to increase the discounts from prime so that the economics of funding variable-rate mortgages continues to make sense. Experts recommend obtaining a rate hold as soon as possible for those in the market for a new mortgage, as there is a risk that fixed rates could rise like variable rates in the next four months. If you need a fixed mortgage in the next four months, get a rate guarantee as soon as possible.


multi-year lows,past couple, Bank of Canada, credit

Source Citation: 
Steve Huebl
Why Are Mortgage Rates Rising?
March 16, 2020
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