RBC the First to Raise Mortgage Rates due to Plunging Bond Prices
There is balance in everything. When one area of the economy goes up, another part must go down. It’s economic balance, and it’s what’s caused RBC to become the first major lender to raise its mortgage rates.
At the end of last week it was reported that Canada added 95,000 jobs in May, a huge increase over what was expected, and a positive outlook after just months ago, the country actually lost jobs instead of adding them. But the latest headline that we added nearly 100,000 jobs came as good news. In the States, they created more jobs there than was expected too, also giving a boon to our economy, as it could forecast an increase in exports.
But with all good comes a little bad and this time, it’s RBC customers looking for a mortgage that will feel the pinch the most. This announcement was revealed after bond prices plunged last week, due to the announcement that employment on both sides of the border is booming.
In the announcement, RBC said that beginning Monday they will be increasing mortgage rates between one-tenth and two-tenths of a point, which will vary depending on the type of mortgage it’s being applied to.
Their biggest increase will apply to the five-year closed mortgage deal that they’ve been offering at 3.09 per cent ever since the end of the mortgage wars last year. That was below their previous rate of 5.14 per cent. While that product won’t be reaching that regular rate just yet, it is said that it’s going to be rising to 3.29 per cent.
The one-year closed mortgage that RBC offers will be rising 0.14 of a percentage point, going up to 3.14 per cent. The bank’s two, three, and four-year mortgages will all be seeing an increase of one-tenth of a point.
With banks already feeling the pinch from residential mortgages, and now feeling an even bigger pinch from plunging bond prices, which affects their commercial lending, it’s thought by many that RBC may just be the first of the major banks to increase their rates.