Fed interest rates could cool Canada’s housing market

As mortgage rates begin to increase it may well lead to a cooling of the housing market according to a mortgage lender’s economist. TD Bank’s Diana Petramala says that fixed rate mortgages could increase by 60 to 70 basis points if, as expected, the Fed raises its interest rates next month due to the link with government bonds. She estimates that the impact on house prices could be as much as 15 per cent over the following six months. Variable mortgage rates have already been creeping up and RateSpy.com founder Robert McLister told The Globe and Mail that it was a surprise:  “It’s a huge change in the variable-rate market – one that very few people anticipated.”

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