With bond yields falling more than 30 basis points in two weeks, RBC is the first to make a move.
The nation’s largest mortgage lender is cutting its 5-year fixed rates by 10 bps.
RBC’s posted 5-year fixed rate will be 5.34% effective tomorrow. Its “special offer” rate is moving to 4.19%. (Actual market rates today are in the 3.89% range for well-qualified borrowers.)
The other banks shouldn’t be too far behind.
The banks last hiked fixed rates on Feb. 7 when the 5-year government bond yield was 2.71%. Today it’s down to 2.52%. (5-year fixed rates track bond yields.)
RBC also cut its 4-, 7- and 10-year fixed rates (see the release). With short rates falling precipitously, we’re surprised RBC didn’t lower its 1- to 3-year rates at the same time.
Last modified: April 25, 2014
watch MSM make a big deal of this rate cut!
Given that two weeks ago your simulations already had the 5-year fixed rate as potentially outperforming the variable, I guess this just adds more fuel to the fire that now might be a time to lock in if you are currently in a VRM.
It will be interesting now to see how the Japanese problem effect rates in Cananda. other countries have alreadt made murmurs.
Time will tell.
The 3-yr swap rate is down sharply again today … to 2.06%, down 35 bps from last month, and to the lowest levels since December 21st … we really should be seeing those 3-year fixed rates come down, otherwise the banks are just enjoying unnaturally fat profit margins.
The 3-year yield is still 50 basis points higher than where it bottomed in August, however, so they may want to keep rates as is and wait and see if yields fall even lower.
Events in Japan this week clearly demonstrate that Statistical analysis and economic forecasts never accurately measure unforeseen world events or accurately measure blind speculation built primarily on greed. All bets are already off if Japan’s Nuclear power plant has a full on meltdown. One moment the Nikkei is down 10%, the next its up 6%. Come on down, try your luck and spin the happy wheel!
I just wonder what people in Pickering, Ont. must be thinking while sitting next to their own Nuclear power plant on the water. Can you imagine having to evacuate the whole GTA and the full consequences of such? yeah, me either.
maybe whats happening in japan will affect some aspects.
I would like to see Japan’s disaster’s effect to Canada also. Time will tell, but how long will it take for Canada’s rates to be effected?
Hi Dino,
While the Japan situation may get worse, and the human toll is a tragedy, most analysts expect the impact on Canadian rates to be minimal.
Of greater importance (rate-wise) are the US recovery (home prices there are still falling!), middle-east tensions, and euro debt problems…