Royal Bank of Canada’s decision to raise its mortgage rates Monday was quickly followed by Toronto-Dominion Bank , in a sign that the mortgage price war could be drawing to a close.
RBC, the country’s largest mortgage lender, increased rates Monday morning as banks seek to reinflate their profit margins.
“Some of our posted rates have risen to reflect cost increases over time,” a spokesman for RBC said in a statement.
Both RBC and TD raised their special offers on four-year fixed-rate mortgages by half a percentage point, to 3.49 per cent, effective March 29.
Mortgage lenders have been locked in a stiff competition that has seen rates fall to record lows, after Bank of Montreal ushered in 2.99 per cent rates in a bid to gain market share. Some executives at rival banks have said that they felt compelled to follow suit even though the mortgages they were selling at the ultra-low rates were barely profitable.
Both RBC and TD also increased their regular five-year fixed-rate price by one-fifth of a percentage point, to 5.44 per cent. And their five-year variable rates are rising by one-tenth of a percentage point to prime plus 0.2 per cent.
Other lenders will now have to decide whether to follow suit or maintain lower rates in an effort to grab more customers.Report Typo/Error