Last week when the Bank of Canada announced their surprise rate cut none of the big banks seemed to be in a rush to announce lower lending rates on mortgages.
We asked which will be the first lender to lower mortgage rates and now we have the answer:
RBC is the first to cut mortgage rates as bond yields plunge.
Royal Bank, the country’s second-biggest lender by assets, offered a five-year fixed rate of 2.84 per cent on Jan. 24, down from 2.94 per cent last week, according to rate-tracking website Ratespy.com. That’s below RBC’s posted rate of 4.84 per cent. The bank also trimmed its three-, seven-, and 10-year rates, according to CanadianMortgageTrends.com, an industry news website.
Race to the bottom or just a good time to renew?
After yesterdays Bank of Canada rate cut we’re seeing lots of articles about what this means for the housing market.
Reasonably enough economists are predicting a dip in mortgage rates after this cut, but so far the big banks don’t seem to be in a hurry.
However, TD Bank was quick to announce Wednesday it will maintain its prime interest rate at three per cent, noting that factors beyond the central bank influence its rates.
“Not only do we operate in a competitive environment, but our prime rate is influenced by the broader economic environment, and its impact on credit,” the bank said in a statement.
And the Royal Bank appeared in no hurry to drop rates either, saying in an email response to a query that “while we don’t have any product announcements to make at this time, we are considering the impact of today’s Bank of Canada decision.”
It was anticipated that the Bank of Canada would move to increase its overnight rate later this year due to an improving economy, until crude prices started to slide and dropped below US$50 a barrel.
Phil Soper, president of realtor Royal LePage, predicted Canadians could be shopping for cheaper mortgages within days.
“It doesn’t take long to react to a policy change like this,” Soper said. “That’s why it’s such a powerful tool.”
Read the full article over at Yahoo.
Are you worried about the effects of rising mortgage rates? Apparently 48% of British Columbians surveyed say yes:
As concerns over the state of the Canadian real estate market abound, a new survey says nearly half of Canadians are unsure about their ability to afford their homes if rates rise by as little as two percentage points.
The survey commissioned by the Bank of Montreal study finds 43 per cent believe an interest hike would either hamper their ability to pay or leave them on unsure footing.
Regionally, residents of Alberta were the least concerned, with 73 per cent saying that rising rates would not affect their ability to afford their homes, while residents of British Columbia were the most concerned. Just 48 per cent B.C. residents are comfortable in their ability to handle higher rates.
Yet interest rates, after bouts of rising and falling, seem low and could remain low for some time to come. Is Canada living in a bistable rift, capable of maintaining high prices with low rates ad infinitum, or should we look to the experiences of the USA and Japan, countries where low rates have not lead to a reconstitution of house price appreciation, for more chilling portents?