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RBC Boosts Fixed Rates, But Not Posted

RBCFixed-rate funding costs have steadily risen for almost two months. We’ve seen the banks lift fixed rates once already, and now RBC is acting a second time.

The nation’s largest mortgage lender is raising fixed rates 10-25 basis points, effective Wednesday.

But here’s the kicker. RBC is leaving posted rates as-is.

In other words, the 5-year posted fixed rate remains at 5.19%. Meanwhile, the “special offer” 5-year rate goes from 4.04% to 4.24%.

This is quite a departure from the norm. Normally posted and discount mortgage rates move together.

We’ve discussed the reasons for RBC’s decision here:  RBC Mortgage Pricing Changes

The rest of the Big 6 will likely follow RBC’s rate increases on discounted rates. What remains to be seen is whether the other banks keep their posted rates in check. The outcome has implications for:

  • The qualifying rate (used to approve high ratio variable and 1-4 year fixed borrowers); and on,
  • The future of posted rates in general. (As posted rates move closer to discount rates they may eventually lose all relevance, and maybe [hopefully] dissapear for good.)

Rob McLister, CMT