Mortgage rates going up: the Trump effect

November 14, 2016 | By | 2 Comments

Mortgage rates going up Canada | Ingrid Bjel McGaughey | Toronto Mortgage Broker | CanadianMortgageCo.comLenders advise: mortgage rates going up

We’ve just received several notifications of mortgage rates going up, imminently.  Rob Carrick’s latest article in the Globe and Mail highlights the impact of the U.S. election on bond rates. “Mr. Trump’s plan is to stimulate the slow-growing U.S. economy by spending big on infrastructure, and that has financial markets worrying about inflation. As a result, investors are dumping bonds and causing certain interest rates to rise.”  Mortgage rates are very closely tied to bond rates.  Therefore, there’s now upward pressure on mortgage rates as well.

Should you choose a fixed versus variable rate?

As Carrick states, “If you’re buying a house or you already own one, it’s time to strategize. We don’t know how much rates will rise or for how long.”  If you’re considering locking in your mortgage rate, now might be the time, while fixed rates are still low.  Variable rates are likely to change as well, although it is more difficult to predict how much they will be affected.  But because your mortgage rate moves in tandem with the prime rate, some change is likely.  TD increased their prime rate recently to 2.85%, so chances are other lenders will follow.   That said, this current spike in rates could be a temporary overreaction to the uncertainty created by the U.S. election.  Rates might (fingers crossed) settle back down.

How will this affect your purchasing power?

The recent changes implemented by the Canadian government, intended to cool off our hot housing market, trump, for now, any rate bumps (forgive the pun, couldn’t resist).   Check out my articles on the impact of these for high ratio mortgages and conventional mortgages.   Currently, the new stress test rate is high enough that, even with the rate increases, there’s no change in affordability.   Once again, mortgage planning is extremely important, to help you understand how the choices you’re facing impact you.

What’s the next step?

If you’re looking at buying a home in the next couple of months, make sure you discuss your plans with an experienced mortgage broker.  Locking in a rate with a mortgage pre-approval is also a smart idea – if mortgage rates drop back down, you’ll get the lower rate, but if they continue to climb, you know your rate won’t go any higher.

If you already have a mortgage, and it’s coming up for renewal, check into your rate options immediately.

If you have any questions about mortgage rates going up, changing mortgage regulations in Canada, or want to do some mortgage planning, please do get in touch with me.  I’d be happy to help.


Photo credit: [c] winnond for

Filed in: Canadian Mortgage News, First Time Homebuyer, Mortgage Planning | Tags: , , ,

About the Author (Author Profile)

I'm a Toronto Mortgage Broker. My focus is on saving people time and money in financing and re-financing their homes. Am passionate about helping people make informed choices, giving back, and helping to improve financial literacy in Canada.

Comments (2)

  1. Chris

    Hello Ingrid,

    Do you work with r/e investors in Guelph area?


    • Hi Chris, yes I do… More and more people are moving outward from the GTA in search of that perfect investment property (and in fact, it’s not just investors, a lot of home buyers are doing casting their net beyond Toronto, too). Feel free to email or text me and we can set up a time to chat about what you’re looking to do. Cheers!

Leave a Reply

Trackback URL | RSS Feed for This Entry

Before you click "submit", please prove that you are a human :) *