TD Going Off Course
 November 2 2016     Posted by Siemens Group

Good morning,

Yesterday TD surprised everyone, including their branch system, by announcing that they were increasing their prime rate charged on their variable rate mortgages to 2.85% from 2.7%. This is an unprecedented move as lenders typically follow the Bank of Canada's lead on increasing this rate. It is also unprecedented in terms of having multiple prime rates charged on different lending products. I contacted TD about this yesterday and the branches still have no insight on two prime rates.

For now, I would suggest that everyone sit and watch what the other lenders do. Do they also adapt a multiple prime rate system? If so, what does this mean to your mortgage?

In many cases, your rate may still be lower than market as the maximum discount offered in today's market is prime less .5%. If you have a deeper discount below prime you are still ahead of the game.

Where this gets tricky is that by making this move it is almost impossible for me to give accurate guidance on prime rate changes. You may recall last year when the Bank of Canada lowered the overnight rate by .25% and the lenders followed by only offering a portion of the rate cut to their customers. With lenders acting in a wild west fashion, we can no longer base on forecast on economics.

While we are confident that the Bank of Canada will not move its' overnight rate in any upward fashion until 2018 we can not predict what lenders will be doing with their prime rate.

As mentioned it is best to wait and see what the next move is before making any changes to your mortgage. Please feel free to contact me @ paula@siemensgroup.ca to arrange for a review of your mortgage should you have any concerns.

Have a great day!