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Rising-Variable-Mortgage-RatesRBC has matched most of TD’s recent rate increases. Other banks may be close behind.

Here’s what’s happening at RBC, the nation’s top bank:

  • 5-year posted:  Up 10 bps to 5.29%
  • 5-year “special”: Up 10 bps to 4.09%
  • 3-year posted:  Down 30 bps to 4.05%
  • 5-year variable: Up 15 bps to prime – 0.10%
  • Open variable:  Up 30 bps to prime + 1.00%

These changes happened to coincide with today’s Canadian and U.S. jobs reports, which far exceeded forecasts. North America’s surprise employment growth is boosting bond yields (which reduces lenders’ profit on longer-term fixed mortgages, other things being equal).

Some will be tempted to speculate we’re near a bottom in mortgage rates (at least short-term). But economic risk remains in Europe and North America. The latest example was Italy and Spain being downgraded again today. Bond yields can still fall off a cliff if more bad eurozone news drives traders into treasuries for “safety”.

The only bright spot in mortgage rates this week is falling 2- and 3-year posted fixed rates.

Then again, the deep dark conspiracy theorist in us notes how “convenient” it is to have 2- and 3-year rates drop in the midst of well-publicized 5-year fixed and variable rate hikes. Rate increases are certainly scaring some people into refinancing before the opportunity is “lost.”

That combination is effectively jacking up IRD penalties on people wanting to break their existing fixed mortgage and lock into a new rate. One of our refi clients, for example, just saw his breakage penalty jump $4,000 in the last two days.

In any event, if you’re mortgage hunting and you haven’t already, it’s a good time to protect yourself with a rate hold.

Rob McLister, CMT