Lots of news making the headlines lately and if anything, it's sparked engagement amongst my clients. Talks of market corrections and rate rises are frequently on the minds of Canadians. As debt heavy Canadians become more cautious about borrowing, banks are looking at higher fees to make up the shortfall. If you have an unsecured line of credit with TD Canada Trust, I encourage you to read a bit further. Also, if you are a client with RBC, be prepared to pay more in fees.
Rate rises are imminent and experts are confident that they will rise slowly. What is meant by slowly? Slow increments meaning a possible 1/4 percent rise by the end of this year and a total of 1 percent by the end of 2013. They are speculating that Prime will be at 5.00% by the end of 2015. Let's put this all into perspective with a couple scenarios:
SCENARIO #1
Mortgage amount $200,000.00
Interest rate 3.00% (variable)
Monthly payment $841.21
SCENARIO #2
Let's hypothetically say rates rise to 4.00%, you would be expected to pay the following:
Mortgage amount $200,000.00
Interest rate 4.00% (variable)
Monthly payment $951.04
*Both examples were amortized over 30 years.
As you can see, the difference is not astronomical; however, adding just over $100.00 a month to your budget can hit you where it hurts especially if you're not prepared.
Speaking of hurting the pocket book, TD Canada Trust has arbitrarily raised interest rates on unsecured lines of credit effective April 01, 2012. Allegedly, notices were sent out to all of TD Canada Trust clients in February that outlined these upcoming changes. I would challenge this practice as I personally did not receive one and through further research; I am not the only one. The changes are not minor in nature, they amount anywhere between a 0.75% to a 3.00% increase. I would encourage everyone that currently has an unsecured line of credit with TD Canada Trust to check your statement and determine if in fact you have been affected by this latest fiasco. According to the Globe and Mail, 60% of TD Canada Trust clients will see their statement reflect an increase and 40% will actually be credited with a decrease in rate.
You are able to submit a query at your local branch but according to local Branch Managers, it is not probable that TD Canada Trust will honour any changes. If you have been affected and would like to me to review your options or move financial institutions, I will schedule a free, face-to-face consultation to make some suggestions.
Canada's largest bank announces that they will be raising fees, including the rate it charges for credit card cash advances. The new fees which affect everything from personal banking to business accounts, become effective June 01, 2012. RBC says the move reflects the increased costs of doing business, they mailed out brochures to all clients. Did you get one?
What next?
As always, I encourage you to contact me if you have any questions with your current mortgage or are looking for one. Please find me on facebook at Jason Nesseth | Mortgage Specialist | British Columbia and on twitter @jasonmortgages.
"Working with you for the life of your mortgage"
Jason Nesseth with TMG The Mortgage Group Canada Inc. If you have any questions or comments about this blog, please feel free to call Jason at 604.375.7375, email jason.n@mortgagegroup.com or visit his website at jasonnesseth.com