Royal Bank of Canada, the country’s second- largest lender by assets, said it’s raising some mortgage rates even as the costs for funding home loans declines.
Royal Bank’s special discounted rate for its five-year fixed mortgage will rise to 3.04 percent from 3.03 percent effective Jan. 8, the Toronto-based bank said Tuesday in a statement. A five-year variable mortgage, which is tied to the bank’s prime rate, will rise to 2.60 percent from 2.45 percent. The lender also raised its discounted rates for two-year, three- year and four-year fixed mortgages.
The increases come even as costs in the part of the bond market where banks fund their mortgage lending have fallen. The yield on the Government of Canada’s benchmark five-year bond touched 0.7 percent Monday, the lowest level since August, when it hit an all-time low.
Discount rates for home loans by Canada’s five biggest banks are starting to creep up, according to Ratespy.com, a Canadian website for mortgage prices. Five-year fixed rates for the banks’ best clients have climbed 5 basis points to 2.84 percent since Dec. 4 for most of the lenders, while variable rates for those preferred customers are at 2.35 percent, up from 2.3 percent a month ago, according to searches on the website.
“The changes we’ve made to our residential mortgage rates reflect a number of factors (beyond the bond yield) including changes in market conditions driving increased short term funding costs and long term/wholesale funding costs,” Royal Bank spokeswoman Jill Anzarut said in an e-mailed statement. The last time RBC raised its mortgage rates was on Nov. 4, which it didn’t disclose in a press release, she said. Other lenders have raised rates as well, including Bank of Nova Scotia, which lifted the rates on its fixed-rate products on Dec. 10, according to spokeswoman Heather Armstrong.
with assistance from Ari Altstedter