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RBC raises mortgage rates, signals end to price war


Royal Bank of Canada, the country's largest mortgage lender, is increasing its rates.

The move is a sign that the mortgage price war could be drawing to a close as banks seek to reinflate their profit margins.

RBC (RY-T) announced Monday that its special rate on four-year fixed-rate mortgages will be increasing by half a percentage point to 3.49 percent.

Mortgage lenders have been locked in a stiff competition that has seen rates fall to record lows, after Bank of Montreal (BMO-T) ushered in 2.99 percent rates in a bid to gain market share. Some executives at rival banks, including RBC, have said that they felt compelled to follow suit even though the mortgages they were selling at the ultra low rates were barely profitable.

Royal Bank is also increasing its regular five-year fixed-rate price by one-fifth of a percentage point, to 5.44 percent. And its five-year variable rate is rising by one-tenth of a percentage point to prime plus 0.2 percent.

The increases all take effect March 29.

As the largest lender, RBC has tended to have a lot of influence on industry prices. Rival lenders will now have to decide whether to follow suit or maintain lower rates in an effort to grab more customers. CTV Two CTV News CTV News Channel BNN - Business News Network CP24