Fed move unlikely to cause significant boost in Canadian rates: experts

“They’ve already priced in this U.S. Fed increase.”

However, one lender announced changes to some of its mortgage rates shortly after the U.S. central bank boosted its key interest rate by a quarter point to a range of 0.5% to 0.75%.

Toronto-Dominion Bank (TD) raised its four-year closed special rate by 0.15 of a percentage point to 2.69% and increased its five-year closed special rate by a 0.1 of a percentage point to 2.94%.

“We regularly review our rates and adjust them based on a number of factors, including the cost that TD pays to fund mortgages, and the competitive landscape,” spokeswoman Cheryl Ficker said of the changes which will be effective Thursday.

The U.S. central bank cited strong signs of economic growth and expectations that inflation will climb higher as reasons for the rate hike. The Federal Reserve also signalled as many as three rate increases in the year ahead.

However, the Bank of Canada is not expected to follow suit with any changes to its key interest rate target any time soon.

“They haven’t indicated any desire to follow in the short term,” Pipkey said.

The U.S. interest rate hike signals that the Fed is feeling optimistic about the economy and tends to cause bond yields on both sides of the border to move higher, said Rob McLister, founder of RateSpy.com.

“Canadian bond yields are tightly linked to U.S. yields,” he said.

Canadian five-year and 10-year bond yields moved slightly higher following the announcement from the U.S. Federal Reserve.

A number of Canadian lenders boosted their five-year fixed term mortgage rates as bond yields moved higher following Donald Trump’s election win south of the border.

TD Bank and Royal Bank of Canada and have both hiked their fixed mortgage rates, anywhere from 0.05 percentage points to 0.4 percentage points in recent weeks.