RBC lowers its five-year fixed rate mortgage

The big news in mortgage rates this week is RBC’s decision to cut its five-year mortgage rate from 3.89 per cent to 3.74 per cent.

The bank hasn’t lowered its posted five-year fixed rate since October 2017, and there’s an expectation that other banks will soon follow — great news for those out shopping for a home and a mortgage.

“RBC is the largest mortgage lender in Canada, so whenever they move their mortgage rates we can expect that the other four banks will follow suit. We anticipate that the other big banks will soon have a publicly posted rate of 3.74 per cent as well, “said James Laird, co-founder of Ratehub Inc. and president of CanWise Financial, advised people looking for a variable rate to act quickly. “We have expected this move from lenders since bond yields dropped in December, after the Bank of Canada’s announcement stating that future rate hikes would be slower and less frequent,” he said. “Canadians who need a mortgage this year should check back frequently with rate sites and mortgage providers. As the spring homebuying market approaches many lenders will offer deep discounts and promotions in order to attract new customers. Anyone looking for a variable rate should act quickly, because the current stable interest rate environment is causing lenders to reduce the discounts being offered on variable rate mortgages.”

Here are scenarios that help break it all down according to Ratehub.ca’s mortgage payment calculator for you, the homebuyer:

Scenario 1:
$400,000 mortgage with a five-year fixed rate of 3.89 per cent

Monthly Mortgage Payments: $2,080.

A homeowner with a 3.74 per cent

Monthly Mortgage Payments: $2,048.

There’s a 0.15 per cent difference in their mortgage rate.

This would lower mortgage payments by $32 monthly or $384 yearly.

Scenario 2:

$800,000 mortgage with a 5-year fixed rate of 3.89 per cent

Monthly Mortgage Payments: $4,161

A homeowner with a 3.74 per cent

Monthly Mortgage Payments: $4,096

There’s a 0.15 per cent difference in their mortgage rate.

This would lower mortgage payments by $65 monthly or $780 yearly.

 

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