TD Bank adjusts rates effective December

THINK OUTSIDE THE BOX:  Consumers will now pay a premium for extended amortizations and purchases of rental properties due to the most recent mortgage rule changes.

Implemented December 1, Toronto-Dominion Bank is now charging an additional 25 basis points to the overall rate for all new mortgages on rental properties.

The bank also added 10 basis points to its overall rate for all new fixed amortizations of 25 years or more, The Canadian Press reported.

The hike came in the wake of a similar move by the bank on November 15, which added 5 basis points to its special rate offer for a 4-year fixed mortgage and 10 basis points to that of a 5-year fixed mortgage.

In an email, a TD spokesperson said that the bank regularly reviews its rates and adjusts them based on existing conditions such as the market competition and the cost of funding mortgages.

On Monday (November 28), Jeremy Rudin of the Office of the Superintendent of Financial Institutions spoke about the need for lenders to maintain prudent underwriting standards as low interest rates and rising property values are not guaranteed realities.

“When house prices have been rising for several years and interest rates have remained at all-time lows, complacency can set in,” the superintendent wrote in the text of a prepared speech for a meeting of mortgage professionals in Vancouver.

“Lenders might be led to believe that weak underwriting standards will be mitigated by ever-rising collateral values.”

The co-founder of mortgage information portal recently warned Canadian consumers that TD Bank’s hikes are just the beginning, and that they should brace themselves for greater expenses in the near future.

“I do expect rates to continue to push up in the coming months and into next year, as opposed to the opposite,” James Laird said, adding that the increased uncertainty in the global bonds market amid the results of the U.S. presidential elections is the crucial factor that will drive these increases.

Ephraim Vecina      December 5, 2016

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