RBC cuts mortgage rate
January 25, 2019
The Royal Bank of Canada (RBC), the biggest bank in the country, has cut its five-year, fixed-term mortgage rate to 3.74 per cent, down 0.15 per cent.
RBC boasted a home loan volume at $246.9 billion as of the end of October 2018, making it the largest mortgage lender in Canada.
Other major banks are expected to follow suit, though alternative lenders have already been trimming mortgage rates after new mortgage applications fell in 2018. Bond rates, which are tied to long-term mortgage lending, have also tanked.
A five-year government of Canada bond yield fell to 1.75 per cent in January, down from 2.5 per cent two months earlier.
New mortgage lending in Canada has been falling since mid-2017. The decline accelerated last year to 21 per cent as of the third quarter compared to 2017, after the expansion of the mortgage stress test and three interest rate hikes by the Bank of Canada.
The RBC rate reduction would translate into a savings of approximately $32 per month on a $400,000 mortgage, compared to its former five-year fixed rate of 3.89 per cent.