Toronto-Dominion Raises Mortgage Rate in ‘Biggest Move in Years’

Toronto-Dominion Bank has lifted its posted rate for five-year fixed mortgages by 45 basis points to 5.59 percent as government bond yields touched their highest levels since 2011 this week.
“It’s a big move, the biggest move in years,” said Rob McLister, founder of RateSpy.com, a mortgage comparison website. “There’s a lot of reasons why that could be -- maybe they’re taking a position on rates going forward, which is not that typical; maybe they’re trying to get people to lock in and generate better spreads.”
Toronto-Dominion, Canada’s second-largest lender, lifted its five-year closed rate on Wednesday, along with increases to its two-year, three-year, six-year and seven-year mortgage rates, bank spokeswoman Julie Bellissimo said Thursday in an e-mailed statement.

Banks generally give homebuyers better terms than their posted rates. Canada’s big banks are charging their preferred customers with sound credit quality 3.39 percent for five-year fixed mortgages and 2.75 percent for variable mortgages this month, according to RateSpy.com. That’s little changed from late January.
Canada’s housing market is has been on a wild ride. House prices in Toronto have begun to stabilize after dropping sharply from last year’s dramatic spike, while prices in Vancouver have rebounded. Sales volumes are still down from last year however after the government introduced regulations to make mortgages more costly.

Bond Yields

“Adjusting our rates is not a decision we take lightly," Bellissimo said. “We look at a number of factors when determining rates including the competitive landscape, the cost of lending and managing risk."
Even with the change, rates “remain competitive and at historically low levels," Bellissimo said.
The change comes as the yield on five-year federal government bonds rose to 2.18 percent Wednesday, the highest in almost seven years.

Toronto-Dominion’s posted rate is now higher than rivals including Royal Bank of Canada, Bank of Nova Scotia and Bank of Montreal, which each advertise posted rates of 5.14 percent. Canadian Imperial Bank of Commerce has the lowest posted rate, at 4.99 percent.
— With assistance by Maciej Onoszko