Last week, Royal Bank of Canada lowered its posted five-year fixed rate from 3.89% to 3.74%. It was the first time since October 2017 that Canada’s biggest bank has lowered its mortgage rate.
What’s interesting about the move is that it’s an about-face in terms of how rates have been trending – upward. The Bank of Canada has regularly increased its benchmark rate and mortgage rates have followed in lockstep.
How Much Will Borrowers Save?
According to Ratehub.ca’s mortgage payment calculator, a homeowner with an $800,000 mortgage and 5-year fixed rate of 3.89% will have monthly mortgage payments of $4,161.
Comparatively, a homeowner with a 5-year fixed rate of 3.74% would have monthly mortgage payments of $4,096.
A 0.15% difference in their mortgage rate would lower mortgage payments by $65 per month or $780 per year.
It’s a Good Time to Shop Around
The takeaway from this rate news is that potential homebuyers should stay informed about where mortgage rates are and where they might be heading.