Dipa Haque
Biz/Tech Reporter

Mortgage rates in Canada remain low despite an increase by several major Canadian banks last week.

Bank of Montreal sparked a mortgage price war between banks last month when it offered a temporary 5-year, 2.99 per cent loan – the lowest rate in recent Canadian history.

“Mortgage rates are tied to the bank’s funding costs which change from day to day,” said Mark Hamill, a Royal Bank of Canada representative. “Our long-term funding costs have gone up considerably due to global economic concerns, and while we have held off in passing on these rate changes to our clients, it is now necessary for us to increase this mortgage rate.”

“It was a bit disappointing to see them go back on it, but I believe it was always known that this offer would be temporary,” said John Manley, an architect who’s been looking for property in the Rexdale area. “But even the recently raised mortgage rates of 3.39 per cent for a four-year fixed mortgage and the five-year special fixed rate of 4.04 per cent are also very reasonable.”

Maleeni Ramkhalawan, a salesperson at Empire Realty Group, said it’s best to take advantage of the low rates now.

“It is a good idea to buy a home now because prices are going up every year by approximately four to six per cent. Based on statistics from the last 30 years, prices have gone up at a small but steady rate,” said Ramkhalawan.

“Recent graduates should buy if they can put aside for a mortgage on their income and, of course, if they can make a down-payment and closing costs,” said Ramkhalawan. “They should buy a home for the monthly amount that it will cost them in renting.”

Ramkhalawan said that recent graduates should keep in mind what they can afford and recommended condos because of their affordability.