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Hot Off The Press!!
We just had a lender, TD Bank, make an interesting move this morning and hope it is isolated to them and them alone…but time will tell. TD is the first and only lender so far to increase their Mortgage Prime lending rate to 2.85%, effective immediately. On the other hand, they have lowered their discount to Prime minus .50%, or 2.35% today. As you can imagine, all those currently with TD for their variable rate mortgages have just had their rates increase 15 basis points.
For those on variable, regardless of lender/institution, they may not see their payment increase, but what has increased is the amount of interest they are now being charged. In other words, if your payment remains the same, yet the rate of interest increases, this means the amount of principal you are paying will decrease accordingly. If you are no longer paying the principal back at the same pace, what do you think happens to your amortization (the amount of time it will take you to pay off your mortgage)? Correct, it will now take you longer to pay off your mortgage. Whose favor does this work in, the borrower or the bank? No need to panic, I would suggest giving my office a shout (403.242.5547) so we can discuss various strategies and better understand any impacts there may be.
This movement in Prime Rate is consistent and supports my forecast, from a few months back suggesting the Bank of Canada will be cutting their overnight rate further.