Quote:
Originally Posted by Gt-R R34
Raising the 5 year fixed doesn't mean the tier structure on how they are based will be different.
IMHO, you'll see a small increase maybe, but i doubt the bottom end pricing will be different as of this point
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I don't agree.
The bottom end pricing is based on new buyers stretching themselves into the market with low rates and 35yr amortizations. These buyers don't qualify at the higher rates used for to qualify variable rate mortgages, so they get fixed rate mortgages. Any increase in fixed rates reduces the buying power of these new buyers, and as we can see, > 50% (my broker estimates its ~80%) need 35yr amortizations just to make the debt-income ratios.
The the bottom falling out of the USD, rates are set to increase, and monetary policy in Canada usually falls closely inline with the US as our banking industry is heavily invested there.