RBC Lowers Mortgage Rates

In another sign that debt markets are relaxed about the danger of inflation, Canada's biggest bank is leading the way to a small cut in mortgage rates, with at least four rivals close on its heels.

Royal Bank of Canada said Friday it will trim its five-year closed mortgage rate by 0.15 percentage point, to 5.7 per cent, as of Saturday.

Canadian Imperial Bank of Commerce matched the cut less than three hours later, followed quickly by Desjardins Group, TD Canada Trust and National Bank of Canada.

"Why are we cutting mortgage rates? We look at the markets," said Judy Levita, a Royal Bank media relations manager. She noted that yields are down in the bond market, where banks finance much of their mortgage lending. "Therefore we adjust."

Royal's 0.15 cut applies to closed mortgages with terms of two years and up, with new rates ranging from 4.95 per cent at two years to 7.85 at 25 years. The one-year open, six-month open and six-month convertible rates are to be cut by 0.10 to 6.9 per cent, 6.6 per cent and 4.75 per cent, respectively.

The bank acknowledges that it already offers promotional rates well below those levels — including five-year closed mortgages at 4.64 per cent — in certain circumstances.

CIBC announced similar rate cuts of 0.10 for terms of one year or less and 0.15 for two to 10 years. (It did not post rates for terms longer than 10 years.) Its new rates are in some cases higher than Royal's and in others slightly lower.

TD announced cuts of 0.15 for terms of two to 10 years, leaving other rates unchanged. Desjardins announced cuts ranging from 0.05 on a one-year open mortgage to 0.15 on one-year to five-year closed mortgages.

National Bank announced cuts of 0.10 to 0.20 on certain terms while leaving others unchanged. Again, rates may be better or worse from bank to bank for some terms.