Mortgage pre-approvals, holds surge as economists foresee rate hikes

A real estate sign is pictured in Vancouver, B.C., Tuesday, June, 12, 2018. THE CANADIAN PRESS Jonathan Hayward

TORONTO — Canadians are scrambling to get mortgage pre-approvals and rate holds as economists predict the pandemic-long stretch of low interest rates will soon end.

Estee Zacks says she recently noticed a surge in requests for rate holds, which freeze mortgage rates for up to 130 days.

The owner of Strategic Mortgage Solutions Inc. says her clients see the holds as a way to get a leg up on hot markets like Toronto that are favouring sellers.

CIBC Capital Markets analyst Benjamin Tal says even a one per cent increase in mortgage rates from current levels will cost an average new buyer $230 or 12 per cent more in additional monthly interest payments.

BMO Capital Markets senior economist Robert Kavcic says five-year fixed mortgage rates are already creeping higher, but people with pre-approvals in hand probably have another month or two to buy a home.

He believes the Bank of Canada will likely hike its rates quicker and by more than most people expect, weighing on buyers.

This report by The Canadian Press was first published Nov. 9, 2021.