Caution Raised in Rush to Lock In Mortgages

Lately, it’s hard to keep up with news reports of mortgage interest hikes. Canada’s major banks have raised longer-term mortgage rates twice in the past two weeks in anticipation of a rise in the Bank of Canada rate.

Should potential homebuyers be worried? In an April 14 article by the Canadian Press , CIBC economist Benjamin Tal questions how much the Bank of Canada rate can really rise over the next year, given the influence of the US Federal Reserve on Canadian interest rates. By most accounts, Federal Reserve Chairman Ben Bernanke doesn’t appear to be keen on raising rates in the US, given their slow housing recovery.

Mortgage professionals are concerned that consumers might feel pressured by news of rising rates to lock in to mortgages with restrictive contracts. For example, a recent story in the Financial Post points out drawbacks of a mortgage offer by BMO that significantly undercuts current rates posted by other major banks.

CENTUM Canada warns panicked mortgage shoppers to take a deep breath – and take time to read the fine print on mortgage contracts. If you are an inexperienced negotiator, an independent mortgage broker can assist you in securing competitive rates. BMO does not work with outside mortgage professionals; however, most major lending institutions work with mortgage brokers at no cost to homebuyers.
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