Is it Time to Freak?
"The Bank of Montreal says it is raising its fixed and variable home mortgage rates by 0.1 percentage points, effective Tuesday." (CBC News) They are looking at the rising bond yields and besides they have not raised rates for the last 4 months (poor diddums) even though the Canadian Bank rate has not been raised for the last 39 months AND the CPI has plunged to 0.7%/yr.
It is not inflation that is a concern; risk is the concern even though most mortgages are insured against default thanks to you dear taxpayer via CMHC. Your taxpaying largess has resulted in your housing cost doubling in the last decade. You have financed the greatest bubble on earth and you have subsidized the Banks via government social welfare for profit seeking global corporations who want to keep their shareholders happy.
Is it time to freak? Probably not, but it's always a good time to plan. When the spread between the BoC and the 5 year retail mortgage rate widened from April 2007 to Dec 2008, the TSX Real Estate Index rolled over and plunged into the pit of gloom.
Before you sign up for that big mortgage, make sure your household income does not have a shorter amortization than the loan. See my Affordability Page and do an analysis of your real estate holdings to see if they can handle more expense and less income. (Yield Calculator)
RISING RATES MEAN
History, Charts & Curated Readings
"History, real solemn history, I cannot be interested in.... I read it a little as a duty; but it tells me nothing that does not either vex or weary me. The quarrels of popes and kings, with wars and pestilences in every page; the men all so good for nothing, and hardly any women at all - it is very tiresome." Jane Austen spoken by Catherine Morland in 'Northanger Abbey'
"Progress, far from consisting in change, depends on retentiveness. When change is absolute there remains no being to improve and no direction is set for possible improvement; and when experience is not retained, as among savages, infancy is perpetual. Those who cannot remember the past are condemned to repeat it." George Santayana Vol. I, Reason in Common Sense