Variable Mortgage Rate spreads are increasing at TD Canada Trust effective Aug. 23rd, 2011. Banks like Firstline (CIBC) have attempted in the past to decrease the discount on Prime that they offered their best clients on Variable Rates as well. Effective tomorrow we’ll be seeing up to a 20 basis point increase on Variable pricing with TD Canada Trust.
Part of the reason for the increase is due to the new International Financial Reporting Standards (IFRS) coming into effect for financial periods beginning on or after 1 January 2011, these standards will make all Financial Institutions include securitized assets on their balance sheet when calculating capital ratios (meaning they need to keep more money set aside, which is more expensive for them), and these costs ultimately make their way down to the consumer. Fixed rates have somewhat been accounting for this already, which is why we’ve seen rates where they are with spreads where they are. And now we are also seeing the effect on variable rates as well.
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