RBC hikes mortgage rates ahead of Bank of Canada rate decision

[Source: BNN, January 12, 2018]

Royal Bank of Canada raised its posted five-year fixed mortgage rate on Thursday, the first of Canada’s Big Five banks to make the move ahead of the Bank of Canada’s interest rate decision next week.

RBC increased its posted five-year fixed rate by 15 basis points to 5.14 per cent, with more rate hikes across the board.

“Rate changes reflect recent activity by competitors, and the current costs that we incur for funds on the wholesale market as well as other costs and market considerations,” A.J. Goodman, director of external communications for RBC’s personal and commercial banking division, said in an email to BNN confirming the bank’s mortgage rate changes.

The mortgage rate hike comes just after the Office of the Superintendent of Financial Institutions’ new guidelines, called B-20, took effect on Jan. 1.

The new rules require prospective homebuyers putting 20 per cent or more down on their home to prove they can service their mortgage at an interest rate 200 basis points higher than the posted rate or the Bank of Canada’s five-year rate, whichever is higher.

The country’s central bank is scheduled to release its rate decision on Wednesday, January 17.

The implied odds of the Bank of Canada hiking its overnight lending rate now sits just above 75 per cent.

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