Just when it seemed first time home buyers might be getting a break with the province’s recently announced a $4,000 land transfer tax rebate, Canada’s biggest bank made it no easier by announcing an increase in residential mortgage rates.
Effective Thursday, the Royal Bank of Canada is hiking it’s five-year fixed mortgage rate to 2.94 per cent, up from 2.64 per cent.
RBC will also increase three-year and four-year rates for these mortgages to 2.69 per cent and 2.79 per cent, respectively.
The move is in line with rival Toronto-Dominion who increased their mortgage prime rate 0.15 points to 2.85 per cent in early November.
Both banks contest the moves are due to changing market conditions and the bank’s own costs of doing business.
TD claims their move was based on a number of factors and did not specifically comment on new rules from the federal government aimed at making it harder to get a mortgage.
However, the banks are believed to be struggling with the new rules especially with bond yields making a sharp increase on the markets in recent days. The big financial institutions usually offset bond increases by passing on increases to customers who take out loans.
It’s believed recent market fluctuation is due to the uncertainty revolving around the U.S. election and the subsequent victory by Republican Donald Trump.
The Bank of Canada is holding the key interest rate at 0.5 per cent due to dampened growth outlook.