Mortgage rates are rising for the fourth time in four weeks as the cost of borrowed money increases.
RBC Royal Bank and Bank of Montreal announced Wednesday they would be boosting their mortgage rates by up to a fifth of a percentage point. Other banks followed Thursday with hikes of their own.
As of Friday, a five-year closed mortgage at all major banks will carry a posted rate of 7.44 per cent — an increase of 0.15 percentage points.
That's the highest posted rate for a five-year mortgage — one of the most popular mortgage terms — since April 2002, according to Bank of Canada figures.
Banks normally discount their posted rates for most borrowers by at least a full percentage point.
But the hike to the posted rates also means that the discounted rates will face similar increases.
The posted five-year mortgage rate will have gone from as low as 6.59 per cent to 7.44 per cent since May 17 — a jump of 0.85 percentage points.
Last month, the Bank of Canada sent unmistakable signals that borrowed money was about to get more expensive.
Yields in the bond market, where mortgage financing is determined, have been rising since the central bank delivered a strong hint that it would hike interest rates — and perhaps more than once this year — to fight inflation.
In a speech Wednesday, Bank of Canada governor David Dodge repeated the language he used back in May to warn of future rate hikes. "Some increase in the target for the overnight rate may be required in the near term to bring inflation back to the target," he told an audience in St. John's.
The yield on the benchmark two-year Government of Canada bond was 4.75 per cent in Wednesday afternoon trading. It was just 4.18 per cent at the start of May.
