Homebuyers across the country are scrambling to redeem existing preapprovals as banks raise interest rates to levels not seen since early 2012.

"We had been looking at a property in Sault Ste. Marie for a couple months," said Graham Martins, a buyer in Barrie, Ont., "but we decided to buy and close earlier this month because we saw rates going up and knew that the rate we had been guaranteed would be hard to get now."

Martins is not alone, with homebuyers and their real estate agents making similar moves to close deals before existing rate holds and preapprovals expire. Their collective decision is based on the kind of spike in mortgage rates the market saw earlier this week and on the heels of CMHC's announcement that it would ration lender access to goverment mortgage guarantees as a way of slowing the market.

Following BMO’s lead – which raised its fixed rates on Tuesday – both RBC and a number of non-bank lenders have raised their rates. And another big bank is expected to announce their increase soon.

On Wednesday RBC announced it had raised its five-year, fixed-rate to 3.89 per cent – an increase of 20 basis points.

“This is the beginning of a test for the mortgage market,” Benjamin Tal, deputy chief economist at CIBC World Markets Inc., told the Globe and Mail. “It’s a test of how Canadians are able to tolerate higher interest rates.”

The rush to buy suggests some buyers would rather not sit that exam. Still the dearth of properties in some market continues to frustrate plans, said Martins.

"The availability issue is a challenge," he said.

To read more, Mark David has written an article about understanding preapprovals.

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