RBC raises mortgage rates, others ‘likely to follow suit’

“Royal Bank of Canada, the country’s largest mortgage lender, is raising its rates and analysts say other banks are likely to follow suit, leaving the threat of a mortgage rate war firmly in the past,” Tara Perkins, The Globe and Mail real estate reporter wrote for the publication at the end of last week. Perkins continued, “The special rate on RBC’s four-year closed mortgages will now rise 10 basis points, to 3.09 per cent, while its five-year special rate will rise 20 basis points to 3.29 per cent. (A basis point is 1/100th of a percentage point.) The posted rate on a one-year mortgage is going up fourteen basis points to 3.14 per cent, while the posted rates on two- and three-year mortgages are each rising by 10 basis points, to 3.14 and 3.65 per cent respectively. The new prices take effect June 10. Mortgage rates became a major point of contention earlier this year when some lenders ratcheted theirs down to all-time lows, and received a scolding for doing so from Finance Minister Jim Flaherty, who has been trying to cool off the housing market. When Manulife Bank cut its posted rate on five-year fixed-rate mortgages to 2.89 per cent in March it received an angry phone call from Mr. Flaherty’s office and quickly pumped its rate back up to 3.09 per cent. Bank of Montreal allowed a special rate of 2.99 per cent to expire amid the controversy. At an event in Halifax on Thursday Mr. Flaherty said the banks are now being very ‘prudent in not reducing their rates.'” Read the full article here. | Raymond Matt, CFP, CLU, TEP, CHS

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