Toronto – Royal Bank of Canada raised its residential mortgage rates on Tuesday, which will make it more expensive for home buyers to spread their loan amortization beyond 25 years.
The financial institution said on Tuesday that its five-year fixed rate rose to 2.94%, an increase of 30 basis points. Its four-year fixed rate is 2.79% and the three-year rate is 2.69%. These are increases of 30 and 25 basis points, respectively.
Royal Bank also introduces higher rates for mortgages with amortization greater than 25 years. These fixed promotional rates for three, four or five years are 10 basis points higher than mortgages with amortization of 25 years or less.
Royal Bank explained that it considers a number of factors when changing its interest rates, including the cost of funds and market conditions. “Our rates, based on current conditions, balance the expectations of our customers with the costs we incur for mortgage financing,” said the senior vice president of financing for mortgages in a statement. mortgage net worth of the bank, Mary Ellen Brown.
The increases announced by Royal Bank follow a similar decision announced earlier in November by the Bank. The latter has raised the interest rates it imposes on its customers for variable rate mortgages.
More complicated task
Mortgage brokers had warned that the rule changes put in place last month by the federal government would complicate the task of non-bank lenders and could lead to higher interest rates.
This increase also comes in the wake of difficulties in the bond market, which has boosted yields and increased costs for banks seeking money to lend on mortgages.
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