Canada’s six major banks, raised their prime lending rates to 3%.

TORONTO- Canada’s six major banks, TD Bank Financial Group, RBC Royal Bank, Canadian Imperial Bank of Commerce, BMO Bank of Montreal, the Bank of Nova Scotia and National Bank, have
all have followed the Bank of Canada after it raised its benchmark interest rate 25 basis points to 1% on Wednesday morning, the banks raised their prime lending rates by the same 25 basis points from 2.75%, to 3%.

Smaller banks including Desjardins Group and Laurentian Bank have also raised their prime rates by the same amount, to 3%.

Prior to Bank Of Canada governor Mark Carney’s decision to raise rates early Wednesday, There were some skeptic among financial analysts owing to the slowing Canadian economy and the more serious economic difficulties faced by the United States and some European countries.

The move comes as many Canadians consumers with variable-rate mortgages have been anxiously watching for any signs, when the Bank of Canada will begin hiking interest rates, in a bid to know if it is the ideal time to lock into a fixed-rate mortgage.

Canada’s banks tend to move tightly in concert following a rate change at the Bank of Canada. Rising rates present a dilemma for many homeowners who face decisions about whether to lock variable rate loans into fixed rate terms or ride it out and hope that rates will come down again in 2011 as the economy slows and inflationary pressures subside.

Fixed-rate mortgages tend to move when bond yields move; the market's expectation is pushing up bond yields, the rates are tied to funding costs, which change day to day, as funding cost has gone up significantly since December of last year. The driving force behind the change in Canada's bond market is the notion that the Bank of Canada might need to raise interest rates sooner than previously thought. a reminder that mortgage rates can go up before the central bank's key interest rate does.

Potential homebuyers entering the market also must consider rising rates when they decide to buy a house. Historically, staying short-term and flexible has been the best strategy, but for many consumers who want to minimize their risk locking in at still-attractive longer-term rates of five years and more is always a good bet.

Generally, long-term fixed rates rise by about half of the variable rate, While the fixed versus variable decision is specific to each individual, if prime rates spike by more than 3 percentage point, odds are good homeowners will save money in a five-year fixed rate mortgage.

If variable-rate mortgages cause you discomfort then perhaps a fixed rate's where you want to be, and if you're closing in the next six months, a fixed rate is where you want to be...I suggest people do that quickly.

Banks are competing more aggressively for mortgage clients than ever, banks have embarked on a cycle of rate increases and rates in the near and medium term will continue to rise before falling again. Mortgage rates hikes are trend, consumers should expect to continue, even though mortgage rates are rising, they are still historically low.

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REAL ESTATE SNATCH is the independent real estate blog of Samir Safadi, Sales Representative of West-100 Metro View Realty Ltd, brokerage it is dedicated to covering Real Estate News, digital culture, social media and technology, providing analysis of trends, Market Data , reviewing new development. Offering Real Estate services resources and guides. Services are provided to prospective buyers and sellers of real estate by Samir Safadi, Sales Representative, West-100 Metro View Realty Ltd, brokerage, duly registered in the province of Ontario, under Real Estate and Business Brokers Act, 2002 (REBBA 2002) and Member in good standing with



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