RBC to Cut 4-Year Fixed Rate

RBC-MortgageRBC is lowering its 4-year fixed rate to 3.19%, according to sources at the nation’s biggest lender.

Reportedly, RBC may offer discretion below that to 2.99% for highly-qualified borrowers.

There have apparently been no changes to the rest of RBC’s advertised rates, including the big kahuna: the 5-year fixed.

Over the past year, RBC’s discounted 5-year rate has averaged about nine basis points higher than its 4-year fixed. If that spread remains the same, it would imply an impending drop to 3.29% on RBC’s 5-year fixed.

Given market volatility, however, there’s a chance banks might price higher, perhaps 3.39% +/-.

For the moment it’s all speculation, but one thing is for certain: very few lenders want to take the initiative and lower rates. It’s a wait and see game to see who moves first.

ATB Financial has demonstrated leadership with its 3.09% 5-year fixed rate. Now it’s time for the banks to show us some love.

Rob McLister, CMT

  1. I just can’t believe rates are this low! Everyone should be taking advantage of saving whatever they can in this environment. I think the big question everyone around here is asking… What will happen to real estate values when rates go up? How do You answer that one?
    Mr Credit
    ESPN Radio San Diego

  2. I still have to decide on if I should pay out my early renewal penalty or if its worth waiting a few months
    So close!!!!

  3. Real estate values are not based on interest rates alone. Unless you’re buying and selling houses like a day trader does stocks it doesn’t matter.

  4. Rob, would you expect the real estate market to continue to thrive then if rates remain this low and continue to slip backwards? I don’t see how that would be bad for housing prices when it is still a hot, hot, hot market with these rates!
    thanks again!

  5. I did this yesterday. Remember that if there is a rate drop before you pay out the mtg, you will have to pay an additional penalty. At least this is what TD told me.

  6. Hi all, I have a question and looking for a thoughts from other folks.
    I have a Mortgage with RBC, which I locked at a Fixed 5.69% almost 4 years ago (yes that high, as it looks today :)). I still have 15 months ahead before the terms is expired. This is on Investment property (which does not cash flow at this moment).
    Now my questions:
    – Should I break my Mortgage now and go for a new rate (I’ll have to pay almost $12K in penalties)?
    – If I break it now, should I go with VRM or lock for another Fixed Term (4-5 years)?
    Thanks in advance,

  7. Hi Chris, Prices are set by both supply and demand. If supply and other demand factors (e.g. employment, lending policies, etc.) remain reasonably constant, then lower rates will be supportive of housing prices for some degree of time. Cheers…

  8. speaking for someone who bailed last year on a fixed its an ouch on the penalty. they folded mine into the principal and by going to a variable i was able to save a pantload the past 14 months or so and it looks like I will be staying with the variable for the next while….but fixed rates are headed down supposedly so u could grab a good rate soon..but to use rob’s analogy, that down escalator is on super slo mo….and who knows, in 15 months rates could still be low…so my thought is the penalty sounds too big to make the jump….

  9. hi,
    I’m looking for some advice. Have a 5 yr fixed @ 5.19. it will be up for renewal on oct 2012. If I opt to take it to another lender offering me 2.1% variable, I will have to pay $3000 on the IRD. I’d like to add also 35K to my existing 140K mortgage to pay off some debts. Should I bite the bullet or wait it out?

  10. Really, though is this the best choice? I can get a 5 yr fixed closed at 3.09 at ATB and not have to worry….

  11. You should be able to get 2.99%… the RBC mortgage specialist you are dealing with has the authority to discount to 2.99% without going to their boss for a higher discount. Just dig a little deeper and demand the 2.99% on the 4 yr fixed.

  12. HI Rob,
    Given the Feds announcement to hold rates and Canada’s expectancy to follow for two years.
    Which product would you chose:
    5 year fixed: 3.34%
    3 year variable: P-.9
    (If variable: my intentions would be to continue playing the short term game by renewing variable rates every 3 years and exercising extra payments against the principle.)
    Great site..

  13. Hi John, Thanks for the post and nice feedback. While I’m unable to give individual advice in the forum, I can tell you this. Based on your projection of no hikes till mid-2013, the variable is the odds-on winner. That assumes economists are right in projecting a return to a “neutral” rate of ~3.00% t0 3.50% in a gradual fashion. It also assumes you’re very well qualified and can pay the variable like a fixed.
    Mind you, many would argue that we’ll see hikes before mid-2013. As such, it wouldn’t hurt to talk with a mortgage planner to run through various scenarios. I’d also lean towards a 4yr at 2.99% instead of a 5yr at 3.34% (if I had to pick fixed). Cheers…

  14. My husband and I are looking to put an offer in on a house and are looking at mortgage rates. Right now we have a variable 2.85 percent and has a cap of 4 something so it won’t go over a certain amount. Unheard of I know. BMO isn’t giving that deal out anymore on the cap. So we are unsure as to whether or not we should do a variable or fixed mortgage if we get this house. We aren’t risky….but we like the lower rate…..we like the cap too! Anyone have some advice for us? What are the past trends like….are the rates supposed to go up?

  15. If you can qualify… you can’t get better than a 4 yr fixed mortgage at 2.99%. I mean that is only slightly worse than your current variable mortgage. Rates probably will not go up until next year sometime on the variable end of things, but to be guaranteed under 3% for the next 4 yrs is the safest bet going right now, you really can’t lose being locked in at such a low rate.

  16. I can’t seem to find any other lender willing to match or go even close to 2.99% on a 4yr fixed. Anyone know of any one?
    Thank you

  17. I currently have a 5 year variable at 2.25%. I just visited the mortgage specialist at RBC and they offered me the 2.99% 4 year fixed. We’re moving to a less expensive house to get lower mortgage payments, but RBC is offering to let me keep my variable rate of 2.25% (P – 0.75) or switch to the 4 year fixed. I’m inclined to stay with the variable as I’m inclined to think that rates will stay where they are for at least a year. Even with a half point increase down the road, that puts me at 2.75%.

  18. hey Alex,
    how about going half & half – keep 50 percent variable and lock in the other 50 percent- kind of a buffer in case things go sideways…( if they let you)

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