RBC’s New LOC Blitz

RBC-MortgageRBC has a new campaign to promote its prime + 0.50% lines of credit (LOCs). Its ads will appear on 270 billboards, 85 newspapers and 50 radio stations. (See this Post story.)

Despite RBC’s media push, this isn’t big news. Prime + 0.50% has been around since fall 2009 (See RBC Cuts HELOC Rates).

Moreover, and contrary to the Post’s article, BMO is not the only other Big 6 bank with prime + 0.50%. Other banks don’t conspicuously promote it, but well-qualified borrowers can often get that rate just by calling a mortgage specialist and quoting RBC and BMO.

Banks also offer prime + 0.50% through the broker channel, as they have for well over a year now.

Lidia Parfeniuk, an S&P credit analyst, told Bloomberg: “We have observed that the banks are ratcheting up competition in the pricing of retail (particularly mortgages).”

RBC’s Canadian Banking boss, David McKay, says: “We’re attacking, aggressively…Now is the time to attack on price, because that’s a big differential to the customer.”

Low rates are always welcome, but with prime + 0.50% widely available, you’ll also want to compare LOC features.

Here are some common differences that separate competing lines of credit:

  • Mortgage features and rates
    • This is obviously a factor if you’re getting a mortgage along with your credit line—i.e., a readvanceable mortgage.
  • Interest offsetting
    • National Bank and Manulife have this feature, and it’s a helpful way to save interest.
  • Number of sub-accounts
    • Multiple sub-accounts are useful if you need to track interest separately for investment or business-related borrowing.
  • Online transfers directly from the LOC
    • This is a convenience feature that lets you pay bills or fund an investment account directly and automatically from your LOC.
  • Credit line portability
    • Portability is nice if you move and want to bring your LOC (and its interest rate) with you.
  • Ability to lock in
    • Some lenders let you convert individual portions of your prime + 0.50% LOC to a discounted fixed or variable-rate mortgage, any time and at no cost.
  • Free banking
    • This can be worth $500+ over five years.
  • Linked bank cards
    • Some lenders offer a credit or debit card that’s linked to your LOC.

If you need a hand sorting this all out, call an experienced mortgage planner. They’ll compare all the banks’ credit lines for you and suggest the cheapest option with the most flexibility.


Rob McLister, CMT

  1. I missed the billboard adverting last year (2 yrs ago ?) when RBC RAISED their rates by 1%
    I guess Banks want to get in on the “Marketing Technique” of raising (quietly) consumer prices on items that they later plan to discount, through future “sale” programs …….to make us feel good about paying more, while still getting less

  2. errrr, good point! Its actually 1.25%. The 1% raise and the 0.25% on the BOC rate that they did not pass through onto their bank prime rate 2 years ago.

  3. I hope other banks follow RBC to lower their HELOC rate to prime plus 0.5%. I have been a long term customer of TD Canada trust. Now have HELOC rate at prime +1% since they increased in 2009. I wonde if anyone has luck to have better rate than prime + 1%. Anyone knows how much it will cost if we move HELOC to RBC from TD? Thank you.

  4. Just go in to your TD branch and ask them for a payout statement (15 days out) because you intend to move it, they will buckle and match the rate before you can say BOO!

  5. Excellent informative and educational article. Thank you for sharing. I’ll be sharing this with my clients.

  6. RBC will pick up your switch costs if you move your HELOC to RBC… that is currently advertised in the ad

  7. Why even dignify the RBC with an article about their product offering? The RBC marketing guru’s are using the broker channel and publications to promote their stuff to our customers! Good or bad publication it will bring customers to the RBC mortgage “specialist” and they will in turn discredit us brokers.

  8. There is a difference in HELOC’s and how the interest is calculated. TD is daily vs RBC monthly.
    For example you purchase something for $5000, and decide to return it 2 days later. TD will calculate only the 2 days the money was taken from the HELOC, whereas RBC calculates based on 30 days so you will be paying more in interest. I have had both HELOC’s and that is a key benefit for me and my business.

  9. My Scotia STEP (HELOC) is still at prime + 1% and I have been requesting and waiting for them to match RBC for the past 6 months. I just forwarded my Scotia contact the RBC article and told him that if Scotia continues to charge me prime + 1%, I will be booking an appointment with RBC to see what they can do for me if I moved all my products over to them.
    I figure that if enough customers do this, the other banks will budge a little. I am moving if another bank can save me money.

  10. Speak with an independent mortgage broker/agent in your local area, as there are now a number of lenders offering our clients Prime + .50% on Heloc’s

  11. In response to pqiu: Just go into your nearest TD branch, they will match the rate for you. No need to switch & apply elsewhere. RBC will only pick up $225 of fees. If RBC needs to appraise your home that’s $250, plus the cost of registration usually $495 if RBC does it internally, plus TD will charge you a discharge fee of $260. Not worth switching when the rate can be changed for free.

  12. From a features and interest cost standpoint, there are better HELOCs than RBC, BMO and TD.
    Check out National Bank and Laurentian Bank.

  13. As with any product, there are pros and cons. These home equity lines of credit (RBC-Homeline, BNS-Step, etc.) is not for everyone. Problem is it is not fully disclosed to customers the true nature of what a collateral mortgage is. The potential upside as mentioned in the article. What about the down side: not transferable, right of offset clause, it generally just locks the customer to a lender. With multiple segments and other same bank products that could fall within the collateral mortgage umbrella, it becomes more difficult for client to severe a bank relationship when they really want to without a cost. Having a financial institution “lockup” your biggest financial asset is something consumer really need to understand before signing for one.

  14. Good for the banks for attacking on price and nothing else! Maybe it’s just me, but I think a wise individual would be looking at a lot more variables than just the rate when they’re on the hook for $400,000

  15. Update:
    My Scotia contact called me a few hours later and told me that his manager approved the interest rate match cause I am a “valued customer”. My HELOC is now at 3.5%.
    You have to look after yourself because the bank is not going to do it for you.

  16. I have an RBC line of credit, and I only get charged interest for the # of days that I use it. It is calculated on my daily balance. I pay any interest costs accumulated over the month on a monthly basis

  17. Can you just confirm whether National Bank’s All-in-One actually still has Interest Offsetting?
    When I look at their web site, it now says:
    “Accounts with debit and credit balances are not set off against each other. ”

  18. Does anyone know if the HELOC is available if you have your first mortgage at another lender?
    I know when we pulled our mortgage from RBC at our last renewal they also closed our HELOC which I think was only charging interest at prime.

  19. Hi Bob,
    To take advantage of interest offsetting in the All-in-One you must do everything (borrow and deposit cash/savings/paycheques) in the same account.
    Cheers…

  20. Hi Tach,
    Yes, it’s possible to get a HELOC in 2nd position depending on your location and qualifications. That said, there are very few lenders that offer this option.

  21. Can anyone confirm if RBC’s Heloc’s interest is really calculated monthly vs daily. Just want to make sure I am comparing apples to apples between RBC an TD, thanks!

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