Well, it looks like a yes. The Royal Bank of Canada has dropped its rate for a five-year, fixed-rate mortgage to 2.84 per cent, from 2.94 per cent, according to Bloomberg. The bank also cut its three-, seven- and ten-year fixed rates as well, Canadian Mortgage Trends reports.
It could mean the start of a new mortgage rate war. RBC dropped its rates last January as well, and sure enough, other banks followed.
Rates on some mortgages could break through an important psychological barrier, and fall through the 2-per-cent mark, some analysts forecast.
RBC’s official posted rate is 4.84 per cent, but most banks are offering borrowers rates well below their posted ones. A five-year- fixed-rate mortgage at Scotiabank is going for 3.19 per cent, while BMO and TD Bank are offering 3.29 per cent, according to RateHub.
But Rob McLister of Canadian Mortgage Trends told the Financial Post some lenders are already offering variable-rate mortgages for as little as 2.05 per cent, and rates could climb down below 2 per cent.
Analysts expect the housing market to come under pressure this year, thanks to falling oil prices and record-high household debt levels.
TD Bank on Monday predicted that eight of 10 provinces would see falling house prices this year, with only Ontario and B.C. escaping a price decline.
But lower mortgage rates could mitigate that effect.
“A decline in mortgage rates will probably create a little bit of extra stimulus,” Altus Group economist Peter Norman told the Post.
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