After four weeks of falling bond yields, banks are throwing us a bone.

RBC just announced a 0.10 percentage point drop to its 5-year fixed rates, effective tomorrow.

Its posted rate (which other banks should match) is falling to 5.59%.

RBC’s “special offer” rate will now be 4.44%, but well-qualified borrowers should expect less than 4.00% on the street.  Most brokers have had 5-year rates under four percent for several days.

Despite the skimpy rate drop, spreads are not egregious by any means. The posted-5-year bond spread is now sitting at 308 basis points. That almost exactly matches the average over the last year.

Interestingly, RBC is also promoting 18- and 24-month rate holds for new builds (only). Those rates are 4.84% and 5.04% respectively for 5-year fixed terms, but RBC mortgage specialists can do better.  RBC also offers a 36-month hold at posted (5.59%).

This is notable only because we haven’t seen 1.5- to 2-year rate holds advertised (in press releases) very often. RBC is clearly trying to get to the customer early, which raises its probability of closing that homebuyer.

TD is another big player in long-term rate holds, an area where banks still hold a major advantage over brokers.

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Rob McLister, CMT