RBC and TD Bank are leading the charge in lowering their posted rates for five-year fixed-term mortgages.

On Wednesday, Royal Bank of Canada lowered its posted rate from 3.89 per cent to 3.74 per cent. According to Ratehub founder James Laird, TD Bank has been offering the same rate since last Thursday, however, the rate is not publically posted.

As one of the most influential banks in the country, industry experts say Canada's other big banks will soon follow in RBC's footsteps.

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“All five banks are very influential but RBC is the most, they are the largest bank in the country and they are the largest mortgage lender in the country so when they move, it really does, usually force the other four to match,” Laird told Global News.

Robert McLister, founder of Ratespy.com says the big banks are actually the ones playing catch up. Alternative lenders lowered their rates weeks ago giving them an edge in the market. According to McLister, Canada's big banks will eventually settle their 5-year fixed mortgage rate at around 3.64 per cent.

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Though RBC is the first bank to publically lower their rates, it is believed that most of Canada's big banks have already lowered rates for preferred clients, such as the case for TD.

Unlike variable mortgage rates, banks base fixed mortgage rates on government bond yields. Fortunately for those with a fixed-mortgage, five-year Government of Canada bonds have fallen drastically from 2.46 per cent in November to 1.93 per cent as of yesterday.

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Variable mortgage rates, on the other hand, are getting more expensive. Variable rates are dependant on the Bank of Canada's overnight lending rate. Though the Bank of Canada recently held rates steady, economists suspect increase rates two more times this year. Since the summer of 2017, the Bank of Canada has increased their overnight lending rate five times.

Personal Finance