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Here we go again with dropping mortgage rates

Posted on Jan 30, 2014 in Mortgage Market Updates and News

Garry Marr
http://business.financialpost.com/author/garrymarr/


TORONTO • Falling bonds yields could push mortgage rates lower in coming weeks as banks compete in the spring housing market, traditionally the strongest real estate period of the year.

Rob McLister, editor of Canadian Mortgage Trends, reported on his website Monday that Royal Bank of Canada had dropped its deep discounted rate on its fixed, closed five-year mortgage to 3.69%. It was just a 10 basis-point cut, but with the way bond yields have started to drop since the beginning of the year, the question is whether there is more to come.

Royal Bank acknowledged it lowered rates 10 basis points on two-, three- and five-year fixed rate terms. “Rates were lowered to match competitor pricing. Competitors have been pricing at lower rates for several weeks, and this rate change now puts us in line,” said a spokesperson.

“The big banks like to cut only enough to maximize their profits,” said Mr. McLister, who is also the founder of ratespy.com. “The fact is when a big bank changes course like this and cuts it advertised rates generally speaking it’s evidence of further change to come in the short-term.”

He said if you look at the some of the deep discounted rates offered on some sites and add maybe 10 to 15 basis points, you can get a sense of how far you can push your bank in negotiation.

January may seem like a slow month for housing, but since many consumers are pre-approved for a mortgage with a guaranteed rate for as long as 120 days, it’s a prime time for lenders to try to lock down customers.


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