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RBC cuts fixed-rate mortgages by 10 basis points – Business – CBC News
RBC cuts fixed-rate mortgages by 10 basis points – Business – CBC News.
RBC lowers fixed mortgage rates 2:15
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RBC has cut two-, three, four- and five-year fixed mortgage rates by 10 basis points after a slide in Canadian bond yields.
Other Canadian banks will be watching the change and could move Monday to follow.
RBC posted the new rates over the weekend on its website. RBC’s discounted five-year fixed rate is now 3.69 per cent, though it may discount that rate for preferred customers.
Five-year fixed mortgage rates rose industry-wide for much of 2013 with an uptick in August helping to cool the overheated housing market.
The five-year rate is an important measure because it is the rate used to qualify borrowers for CMHC financing and for variable and other fixed-rate terms.
The new rate reflects the lowering of Canadian bond yields by 26 basis points in January, which mirrors the slide in yields on U.S. bonds. Bank borrowing costs rest in part on bond yields.
The Bank of Canada has not changed its key overnight lending rates to the banks – it will announce its latest decision on interest rates on Wednesday.
Bond yields rose when the U.S. Federal Reserve decided in December to taper its bond-buying program to $75-billion US a month, but the market has since absorbed the change. However, further Fed tapering or changes in the U.S. economic outlook could lead to fluctuation in the bond markets later this year.
The small change in rates won’t have much impact on home buyers at a time when rates are so low, says one mortgage broker.
“From a mortgage broker’s perspective and probably from a lot of homeowners’ perspective, the real question is not necessarily interest rates,” said Jason Scott of The Mortgage Group in Edmonton.
“It’s got more to do with what the finance minister and the department of finance will do vis-a-vis making it harder to qualify for a mortgage if they don’t like the fact that rates are low and they’re concerned about a possible housing bubble.”
Finance Minister Jim Flaherty has expressed concern at Canada’srapidly rising housing prices and has taken a series of measures over the last two years to cool them, including demanding higher downpayments and limiting most mortgage terms to 25 years.
Average Canadian house price up 10% to $389,119 – Business – CBC News
Average Canadian house price up 10% to $389,119 – Business – CBC News.
Bankers disagree on housing bubble 2:59
The average price of a Canadian home increased 10.4 per cent to $389,119 in December, compared to the same month in 2012.
The Canadian Real Estate Association (CREA) released data Wednesday showing that a total of 457,893 homes changed hands in Canada last year, an increase of about 0.8 per cent from 2012’s level.
“Absent further mortgage rule changes,” CREA’s chief economist Gregory Klump said, “sales in 2014 may surpass the annual total for 2013 if demand holds steady near current levels as strengthening economic and better job growth offset the impact of further expected marginal mortgage interest rate increases.”
As has been the case for some time now, CREA says the large jump in prices was largely due to what was happening in Canada’s most active and expensive markets.
Broad gains
Sales activity in December 2012 in Toronto and Vancouver was abnormally low, which dropped the national average at that time.
“Removing Greater Vancouver and Greater Toronto from national average price calculations cuts the year-over-year increase to 4.6 per cent,” CREA said.
CREA says the average price can be misleading, as it can be too easily influenced by individual factors.
The realtor group says its MLS Home Price Index “provides a better gauge of price trends because it is not affected by changes in the mix of sales activity the way that average price is.”
That index shows home prices rose 4.31 per cent over the past 12 months. Gains were seen in all housing types.
The index was led by an 8.7 per cent gain in Calgary and a 6.3 per cent gain in Toronto.
Vancouver’s market index posted a second straight increase of 2.13 per cent after declines for much of the time between late 2012 and late 2013.