RBC Cuts 5-Year Fixed Mortgage Rate

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.  

However, homebuyers can save even more by shopping around. The best mortgage rate in Ontario, for example, is 3.29% for a five-year fixed rate. That’s also the best mortgage rate in BC and Alberta

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.

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