What's Happening with 5 Year Fixed Rates?
RBC cuts 5 year fixed rates
Just a few days ago, RBC announced that they have dropped their 5 year fixed rate form 3.89% to 3.74%.
As determined, fixed rates are expected to drop. However, we didn't expect it to be so soon!
According to Rob McLister, founder of RateSpy.com, he said the sudden rate drop is highly due to the subsiding market volatility and the rate that banks pay in the bond market.
Will Other Lenders Follow Suit?
The "Big 5 Banks" -- this include TD, Scotiabank, RBC, CIBC, and BMO, have 90% of the market share. However, when online "non-banks" have already decreased their fixed rates, it puts pressure on our big banks to become more competitive. [This is why I always recommend my clients to explore options with our MonoLine Lenders, as they can offer lower rates and more competitive pre-payment options!]
Therefore, the answer is... YES! Expect other major banks to begin dropping their 5 year fixed rates. They are all competing for the same market share.
How does a 15bps Rate Decrease Affect a Mortgage? [Photo taken from CBC.ca, by James Laird, president of CanWise Financial]
$32/month may not be a large impact to your clients. However, if the upcoming trend for the Spring Market is a decrease in 5 year fixed rates, there could be an opportunity in large savings for your Spring clients.
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