RBC latest bank to hike mortgage rates, raises fixed-rate loans

RBC is hiking mortgage rates.
RBC is hiking mortgage rates. AP Photo/John Bazemore, File

RBC Royal Bank is increasing its residential mortgage rates, effective Thursday.

Canada’s biggest bank said the hike is due to changing market conditions and the bank’s own costs of doing business.

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The change comes a month after the federal government implemented new mortgage rules aimed at easing the risk surrounding Canada’s real estate market. Industry experts warned after the announcement that the changes could result in rising mortgage rates.

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The move follows TD’s rate increase earlier this month; TD’s hike didn’t affect fixed-rates loans, while RBC’s will.

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Meanwhile, the Bank of Canada has held the key interest rate at 0.5 per cent due to dampened growth outlook.

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The hike comes on the heels of the U.S. presidential election and the victory of Donald Trump, which temporarily sent markets into a tailspin and has caused volatility in the bond market.

The bank is raising its special offer for a five-year fixed rate mortgage to 2.94 per cent, an increase of 30 basis points.

The lender is also raising its special offer for a four-year fixed rate mortgage to 2.79 per cent and three-year fixed rate mortgage to 2.69 per cent, increases of 30 and 25 basis points, respectively.

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“We consider a number of factors when making changes to mortgage rates, including our funding costs and market conditions,”  Mary Ellen Brown, senior vice-president of RBC’s Home Equity Financing, said in a release.

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“Based on current conditions, our rates reflect the right balance between our clients’ expectations and our costs of funding mortgages.”

The rates remain at rock-bottom levels, the bank notes.

This is RBC’s second rate hike this year.

— With files from the Canadian Press

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