“Monoline rates will definitely increase in the near future … but until then brokers will benefit from RBC and other banks increasing their own rates,” Walid Hammami, a broker with Dominion Lending Centres
, told MortgageBrokerNews.ca. “Once a lot of monoline business comes in, they will also increase their rates a bit.”
Hammami is suggesting clients who are set for renewal in the next few months lock in rates right now, before that hike happens.
Last Friday, RBC increased its rates on fixed mortgages between two and five years by 10 basis points; it also increased five-year variable rates by 15 basis points.
“The changes we’ve made to our residential mortgage rates reflect a number of factors (beyond the bond yield) including changes in market conditions driving increased short term funding costs and long term/wholesale funding costs,” Royal Bank
spokeswoman Jill Anzarut told Bloomberg.
It was an odd announcement, but one that has allowed brokers to take advantage. At least for now.
“You have to factor in that some of the monolines receive funding from some of the big banks,” Hammami said. “The banks will likely hike up the cost of funds for monolines eventually, which will force those lenders to increase their rates.”
As it stands Hammami says some monolines have already increased variable rates by 15-20 basis points.
“It seems fixed rates will remain low for a while, so they have increased their variable rates to make fixed seem more enticing,” he said.
Brokers will have a leg-up on the competition – at least for the next few weeks – and should look to take advantage, according to one industry veteran.