Brokers won't have more than two week to take advantage of RBC’s move to bump up its discounted five-year-fixed by 20 bps, caution some industry players.
“Brokers could definitely use this to their advantage in the short term,” said Kunaal Bhalia, broker with Dominion Lending Centres - Mortgage Village. “It may last for a couple of weeks or until other lenders decide to raise their rates as well.”
Effective today, RBC’s special-offer rate on a five-year fixed mortgage is 3.69 per cent, reflecting a 0.2 percentage point rise. The bank also increased its rate on a three-year fixed to 4.05 per cent.
Most major commercial banks have been offering three-year mortgages at 3.95 per cent and five-year fixed mortgages anywhere between 3.29 per cent and 5.24 per cent since the end of January.
Banks, however, have been offering in-branch discounts much closer to broker rates in an effort to remain competitive in a slowing market.
Bhalia said RBC’s rate hike may indicate that the bank is “balancing its books.”
“The increase seems to be uncharacteristically high for the market where you can still see lenders offering 3.09 per cent,” Bhalia told MortgageBrokerNews.ca.” I think RBC must be balancing its books. Maybe they realized they were top heavy of mortgages.”
Bhalia said some banks will likely jack up their rates right away, but he expects other lenders to hold back a bit to pick up any business RBC is likely to lose with the move. The bond market isn't expected to force an increase for at least another week, say analysts.
“I expect TD and Scotiabank to follow Royal Bank’s lead pretty quickly,” Bhalia told MortgageBrokerNews.ca. “However, other lenders like Street Capital and Merix will likely hold back as long as they can, even for up to two weeks.”