Skip to main content
The Globe and Mail
Support Quality Journalism.
The Globe and Mail
First Access to Latest
Investment News
Collection of curated
e-books and guides
Inform your decisions via
Globe Investor Tools
per week
for first 24 weeks

Enjoy unlimited digital access
Cancel Anytime
Enjoy Unlimited Digital Access
Get full access to
Just $1.99per week for the first 24weeks
Just $1.99per week for the first 24weeks
var select={root:".js-sub-pencil",control:".js-sub-pencil-control",open:"o-sub-pencil--open",closed:"o-sub-pencil--closed"},dom={},allowExpand=!0;function pencilInit(o){var e=arguments.length>1&&void 0!==arguments[1]&&arguments[1];select.root=o,dom.root=document.querySelector(select.root),dom.root&&(dom.control=document.querySelector(select.control),dom.control.addEventListener("click",onToggleClicked),setPanelState(e),window.addEventListener("scroll",onWindowScroll),dom.root.removeAttribute("hidden"))}function isPanelOpen(){return dom.root.classList.contains(}function setPanelState(o){dom.root.classList[o?"add":"remove"](,dom.root.classList[o?"remove":"add"](select.closed),dom.control.setAttribute("aria-expanded",o)}function onToggleClicked(){var l=!isPanelOpen();setPanelState(l)}function onWindowScroll(){window.requestAnimationFrame(function() {var l=isPanelOpen(),n=0===(document.body.scrollTop||document.documentElement.scrollTop);n||l||!allowExpand?n&&l&&(allowExpand=!0,setPanelState(!1)):(allowExpand=!1,setPanelState(!0))});}pencilInit(".js-sub-pencil",!1); // via darwin-bg var slideIndex = 0; carousel(); function carousel() { var i; var x = document.getElementsByClassName("subs_valueprop"); for (i = 0; i < x.length; i++) { x[i].style.display = "none"; } slideIndex++; if (slideIndex> x.length) { slideIndex = 1; } x[slideIndex - 1].style.display = "block"; setTimeout(carousel, 2500); } //

Royal Bank of Canada is raising the posted rates on some of its fixed-rate mortgages, becoming the second big bank this week to make adjustments following sharp increases in government bond yields.

RBC confirmed on Friday that it is raising rates on its one-to-four year mortgages by 15 basis points. It is also raising rates on its five-to-10-year mortgages by 20 basis points. (There are 100 basis points in a percentage point.)

Based on the bank’s current posted fixed five-year mortgage rate of 5.14 per cent, the new rate will rise to 5.34 per cent − although home buyers can generally negotiate with lenders to get rates considerably lower than their posted rates. The changes will take effect on Monday.

Story continues below advertisement

Six actions to consider taking right now as three major banks hike mortgage rates

Related: Canada’s housing sector still highly vulnerable to market instability: CMHC

Rob Carrick: You may have to work until 70 to afford a house: Mortgage rates are heading higher

RBC joins Toronto-Dominion Bank, which announced earlier this week that it will raise its posted rate for five-year fixed mortgages by 45 basis points, taking the rate to 5.59 per cent. TD raised rates on other mortgages too.

Late Friday afternoon, National Bank of Canada also said that it is raising its fixed rate mortgages, by 15 to 30 basis points. The rate on its five-year mortgage, for example, will rise 20 basis points, to 5.34 per cent. The changes take effect on Tuesday.

Canadian Imperial Bank of Commerce and Bank of Montreal did not respond to a request for comment. In a statement, Bank of Nova Scotia said: “ Scotiabank has not increased its posted mortgage rates since January. We cannot elaborate on pricing changes we might be considering.”

Brad Henderson, chief executive officer at Sotheby’s International Realty Canada, believes that the increases will have little impact on the housing markets in major Canadian cities, given the strong demand for housing amid low unemployment rates.

“We worry a bit more about the smaller cities,” Mr. Henderson said. “If you’re not in a major city like Toronto, Montreal, Vancouver or Calgary, the impact is going to be more pronounced.”

While raising its fixed rates, RBC said that the rate on its variable-rate mortgages will decline by 15 basis points.

“The banks may very well be trying to entice clients to consider variables again,” said Joe Sammut, a mortgage broker at Toronto-based Mortgage Architects.

Story continues below advertisement

He speculated that the cost for banks to fund variable mortgages is lower than the cost of funds for fixed-rate mortgages.

The mortgage-rate changes follow rising bond yields in the United States and Canada, which are driving borrowing costs higher.

The yield on the Government of Canada five-year bond rose to a seven-year high of nearly 2.19 per cent on Wednesday, up from 1.63 per cent at the end of November. On Friday, the yield was 2.13 per cent.

Although home buyers can negotiate lower mortgage rates than those posted by the banks − Mr. Sammut said that five-year fixed rates are generally between 3.59 per cent and 3.69 per cent − the increases to posted rates suggest that borrowing costs are rising to reflect stronger economic activity, rising inflation and higher interest rates.

The Bank of Canada and the U.S. Federal Reserve left their respective key interest rates unchanged following their most recent monetary policy announcements. However, the Fed has increased its rate six times since the end of 2015.

The Bank of Canada has increased its key rate three times over the past year, taking the overnight rate to 1.25 per cent from 0.5 per cent. According to Bloomberg News, financial markets believe there is a 65-per-cent chance that the central bank will hike rates again by mid-July.

Story continues below advertisement

The shift from ultracheap borrowing costs comes at a time when regulators are trying to cool Canada’s housing market, particularly in Vancouver and Toronto, with tougher rules for mortgage lending.

As of January, prospective home buyers with more than a 20-per-cent down payment are now required to pass a stress test to ensure they can make mortgage payments even if mortgage rates rise by two percentage points.

The changes have raised questions about how many prospective home buyers will now be shut out of the market.

The Toronto Real Estate Board reported earlier this month that Toronto home prices fell 14 per cent in March, year-over-year. However, prices rose 2.2 per cent from the previous month, suggesting prices have begun to stabilize.

In Vancouver, the number of residential sales fell nearly 30 per cent in March, year-over-year. However, condominium prices rose 22.8 per cent while prices for detached homes fell 6.2 per cent.

Your Globe

Build your personal news feed

  1. Follow topics and authors relevant to your reading interests.
  2. Check your Following feed daily, and never miss an article. Access your Following feed from your account menu at the top right corner of every page.

Follow the author of this article:

View more suggestions in Following Read more about following topics and authors
Report an error Editorial code of conduct
Due to technical reasons, we have temporarily removed commenting from our articles. We hope to have this fixed soon. Thank you for your patience. If you are looking to give feedback on our new site, please send it along to If you want to write a letter to the editor, please forward to
Comments are closed

We have closed comments on this story for legal reasons or for abuse. For more information on our commenting policies and how our community-based moderation works, please read our Community Guidelines and our Terms and Conditions.

To view this site properly, enable cookies in your browser. Read our privacy policy to learn more.
How to enable cookies