15 July 2011
Here are also some other interesting facts from the report:
• 40% of today’s mortgage borrowers have variable-rate mortgages. In 2007 it was only 24%.
• TD expects the tightening of monetary policy to start in January 2012. “As a result, the overnight rate will reach the level of 2.00% next year. Then, after a small pause, the Bank of Canada will, probably, continue the hike cycle and raise the rate to 3.00% by mid-2013.”
• According to TD’s forecasts of a 200bps (2%) rate hike, variable-rate payments will rise by $110 per $100,000 of mortgage.
• “It’s obvious that interest rate increase and the amortization rule change will scare away some potential buyers, especially, the first-timers.”
• The recent reduce of a maximum amortization term from 35 to 30 years will affect about 1/3 of all borrowers.
• Speaking about a sharp rate hike, TD Bank has its own opinion: “At this moment a disruption in Canadian employment, caused by an unexpected international shock, is more probable than a spike in mortgage rates”.