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RBCIt’s sometimes hard to understand why HELOC rates are still high, while variable mortgage rates keep falling.

We asked RBC this question because, just yesterday, it raised its HELOC rate by 1/4%. Prior to that, it led the industry since October at prime + 0.50%.

Spokesperson, Gillian Mcardle, said:

“We base mortgage product pricing decisions on a number of factors — these include not only funding (cost) and risk factors, but also strategic, business decisions to differentiate ourselves in the marketplace.”

McArdle says that RBC “characterizes (its HELOC rate change) as having ended a special rate offer and moving back to our everyday low pricing.”

She also confirmed that RBC’s new HELOC rate of prime + 0.75% applies only to new lines of credit within an RBC Homeline Plan.  RBC’s existing lines are not affected.

In general, HELOCs come with a bit more risk and higher funding costs than a regular variable-rate mortgage, so they’re rarely as aggressively priced.


Sidebar:  It’s not that common for big banks to make prominent announcements about HELOC rate increases. RBC’s decision to issue a release on this rate change was, therefore, somewhat interesting.