RBC-BankRBC cut a number of its standard fixed rates this weekend. It’s the first of the majors to do so following this month’s 26-basis point slide in 5-year government bond yields.

Most other banks will likely do the same.

Bond yields, which guide fixed-rate funding costs, have been pushed down by discouraging economic data. That’s led the nation’s second largest lender to chop its 2-, 3-, and 4-year posted rates, as well as its 4- and 5-year “Special Offer” rates — all by 10 basis points.

5yr-Bond-Yield

RBC’s discounted 5-year fixed rate is now 3.69%. For well-qualified borrowers, it usually marks that down further to remain competitive with the typical “street rate,” which is currently 3.39% or less.

RBC’s 5-year posted, along with the other Big 6 banks’ posted rates, form Canada’s benchmark rate. That’s the rate commonly used to “qualify” borrowers for variable and 1- to 4-year fixed terms. The benchmark hasn’t changed since August and is currently at 5.34%. If other banks follow RBC’s lead, it should drop to at least 5.24%.

RBC did not issue a press release on these rate cuts, preferring to keep them lower profile.


Rob McLister, CMT