Royal Bank Salute

Three Times Lucky

In salute to a quickly changing financial world with dire warnings from the Bank of Canada, RBC seemingly on a mortgage rate increase rampage, has for the third time in as many weeks increased mortgage rates.

If you contributed to the hat this young lady is wearing and were amongst those thinking the Vancouver real estate market was going to slow as a result of these pronouncements and other factors, then her salute is also for you!

In a Globe and Mail report from Tavia Grant and Steve Ladurantaye, they tell us that “the rate on a five-year closed mortgage is now 6.25 per cent, an increase from the previous rate of 6.10 per cent. A one-year closed rate will, as of tomorrow, be priced at 3.80 per cent. All rates were increased by 15 basis points.”

Warm Fuzzies

The feel good part about this latest increase is that banks can adjust the rate they charge. Things you need to know in order to get their ‘preferred’ rate.

• be in a good financial position
• use a mortgage broker to find the best deal
• negotiate, negotiate, negotiate

For How Long?

Grant and Ladurantaye kindly point out that this latest hike comes on the heals of a Canada Mortage and Housing report ” showing that 81 per cent of recent home buyers feel comfortable with their current level of debt.”

All seems good for now but, are these same folks going to feel that way when rates hit 7,8,or 10 percent or more?

• will buyers continue to assume high debt loads?
• will sellers stand guard over their high prices?
• has everyone forgotten that the low rates were to serve a nation wide recovery
• have we forgotten that what we now see as high rates were common not long ago?
• will those CMHC repondents salute their ‘comfort’ when it is time to renew their mortgage?