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The Royal Bank of Canada has hiked some of its key mortgage rates.
The bank announced on Monday that it’s is raising the rate on its five-year fixed mortgages by 20 basis points to 3.69 percent. The bank also hiked the rate on its three-year closed mortgage by 20 basis points to 4.05 percent.
RBC says the move reflects the higher funding costs facing the bank.
"Mortgage rates are tied to the banks funding costs, which change from day to day," Matt Gierasimczuk, an RBC spokesperson, tells BNN in an email. "Our long-term funding costs have gone up and it is now necessary for us to increase the mortgage rate."
RBC last raised mortgage rates in May.
Earlier this year many of country's leading banks rushed to lower raises in a move that many market commentators called a mortgage price war. Bank of Montreal kicked off the mortgage battle in January by lowering its five-year fixed interest rate to 2.99 percent.
The move by RBC also comes in the wake of new rules by Ottawa to tighten mortgage regulations.
Ottawa introduced rules in June that would shorten the maximum mortgage amortization period to 25 years from 30 years and lower the amount homeowners can borrow against their house to 80 percent from 85 percent. They also limited taxpayer-backed mortgage insurance to homes that sell for less than $1 million and capped the gross debt service ratio of a mortgage to 39 percent and the maximum total debt service ratio to 44 percent.
Data from the Bank of Canada shows that Canadian banks have, on average, been offering interest rates of 5.24 percent on conventional 5-year mortgages since beginning of June -- slightly lower than the 5.29 percent rate offered at the beginning of the year.
The final interest rate that banks charge consumers can be different than what they report to the Bank of Canada, due to negotiations with consumers and limited-time offers.