We can’t help but love how RBC enjoys going counter-trend.
With bond yields* making 40-day highs, RBC has deemed it appropriate to lower its 5-year fixed rates by 10 basis points.
If other banks follow suit as usual, posted will drop to 5.19%. That’s Canada’s lowest posted long-term mortgage rate since the 1950s.
This is the kind of contrary thinking we like, but hopefully it lasts.
Back in March, with bond yields running up 30 basis points, RBC did the same thing and surprised the market by cutting rates. (See: Opposite Day For BMO & RBC) A few weeks later it changed course and hiked rates the most since 1996. (See: RBC Lifts Fixed Rates. Big.)
RBC is the nation’s biggest mortgage lender and a frequent trend setter for rates. Today’s move lowers its “special offer” 5-year fixed rate to 3.79%. These changes take effect tomorrow.
Update: All major banks have now moved their posted 5-year fixed rates to 5.19%.
* 5-year bond yields typically lead 5-year fixed mortgage rates.
Do you think all lender will follow?
ING? minus .10 from today’s rates…
How soon do they act usually…
My mortgage is renewing very very soon (next few weeks)
Unbelievable!
The big question is … do you think that BMO will follow and cut their ultra-low special offer 3.49% rate by 10 basis points as well? 3.39% advertised for five years seems just too good to be true
Scotia dropped too…
ING doesn’t always follow the major banks.
Is it possible for an Australian to access these loans for an Australian property?
No ma’am!
You can already get 3.39% through the broker channel. Even 3.29% “no-frills” is available. Although it’s quite restrictive, it’s an option.
I believe RBC are lowering rates because they are betting bond yields would continue to remain under pressure. With that said, at 2.10% for the 5-year yield we’re starting to test the limits as lenders barely meet their target margins.
Well let’s keep in mind that bond yields are still 110 basis points below their 3.20% peak from April, at which time posted mortgage rates were 6.25%.
Now with posted rates at 5.19%, we’re down 106 basis points, so basically right in line with bond yields.
The reason banks are still able to cut mortgage rates today is that they didn’t pass on all the savings they could have while bond yields were plunging the past six months.
BMO justed dropped their rates on both the 5 year fixed and their low rate mortgage…low rate down to 3.39%
That is great to see. This will help & spark more first time home buyers get into the real estate market.
BMo offered us last week the following.
3 years fixed — 3.23% 35 years amortization
5 years fixed — 3.54% 35 years amortization
5 years fixed — 3.39% maximum 25 years amortization
Should I try to get .10 lower now? im getting close to 90 days out.
Yes they will
Rate is currnetly 3.29%
BMO’s no frills rate is 3.39%, not 3.29%
http://www.marketwire.com/press-release/BMO-Bank-of-Montreal-Decreases-Mortgage-Rates-TSX-BMO-1349952.htm
So Rob, do we have critical mass for the BoC to officially lower the qualifying rate on Monday?
I suspect we should!
I suspect it will be VERY short-lived … i.e. this Monday only, by the following Monday we’ll be back up.
Yields and swap spreads are soaring today … highest levels since early August now.
Firstline lowered their 5 year rate by 10 bps – so likely that others will follow