It may be an odd move by the biggest of the big banks but it’s one that brokers can use to their advantage, according to one industry veteran.
RBC announced earlier this week that it would hike its interest rates effective Friday, and with tradition showing monolines usually follow suit, brokers could be well served to take the opportunity to reach out to clients set to renew in the near future.
“I do expect the monolines to follow suit -- they usually do – but even if they increase by the same percentage points, they will still have better rates than the banks,” Deep Bansal, a broker with Dominion Lending Centres
, told MortgageBrokerNews.ca. “It’s absolutely a great time to contact clients, especially those up for renewal in the next few months; it’s not often you head publicity from banks when they’re raising rates.”
Effective Friday, RBC increased the rates on fixed mortgages between two and five years by 10 basis points; it also increased five-year variable rates by 15 basis points.
“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 told Bloomberg.
The last time RBC hiked its rates was November 4, though it didn’t disclose that increase beforehand.
Publicly announcing the changes was unexpected among many mortgage brokers. But it’s certainly one they can use to their advantage.
“It’s usually the opposite: Banks will publicize rate going down,” Bansal said. “I do think it was a bid to drum up business and get clients to jump into the market ahead of it.”