Banks are nudging up their variable mortgage rates:
Bank of Montreal later joined Royal in raising its five-year variable closed mortgage to three per cent which, in the case of BMO, represented a 0.15 percentage point increase.
Meanwhile, the Royal’s special variable rate mortgage also increased by a fifth of a point to prime minus 0.45 percentage points, making it 2.55 per cent.
In the past when banks raised variable rates without a corresponding increase in the Bank of Canada rate, they were accused of trying to boost profit margins at the expense of borrowers.
But Royal Bank, which is also Canada’s largest mortgage lender, said the latest increase reflects higher costs in the bond market, where it raises money to finance its mortgage loans.
Bond interest rates have risen due to growing debt fears in the United States and Europe as lenders want higher rates to part with their money in a riskier global economy.
Full article over at CTV.