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[Royal Bank] RBC new 3-4-5 year mortgage rates

  • Last Updated:
  • Oct 25th, 2020 12:08 pm
Newbie
Jun 18, 2009
77 posts
26 upvotes
Toronto
I'm not sure if this has been pointed out, but TD increased their base discount for 5yr variable. 2.6% - 0.9% = 1.7%. If you can get this from TD, RBC will likely match for you. This change for TD occurred on September 18. I know some people that were able to get as low as 1.62% from TD.

If it helps, they put it in for a default 25yr amortization even for renewal but this can be lowered. My amount was less than $300,000.
Newbie
Sep 28, 2020
7 posts
4 upvotes
I just got 1.87% with the amortization of 25 years on a $392,500 mortgaged amount (20% down) with RBC. Is that reasonable or should I push them for more?
Deal Addict
Aug 5, 2015
2071 posts
1360 upvotes
Montreal, QC
MohammedN12523 wrote: I just got 1.87% with the amortization of 25 years on a $392,500 mortgaged amount (20% down) with RBC. Is that reasonable or should I push them for more?
Unless you really want to be with RBC, you could get below 1.70% (or below) elsewhere in my opinion especially with your mortgage amount, you've got some nice bargaining power here. Of course we can't say for sure as we don't know your specifics.
Happy Koodo Public Mobile customer :-)
Jr. Member
Sep 11, 2007
149 posts
110 upvotes
Is there a reason people would "want" to go with RBC? At the end of the day, isn't this just a rate game of "let's get the lowest rate"? Is there a service that RBC provides that is superior to others? Since RBC has some of the highest rates, I can't see why folks wouldn't go elsewhere. Just wanted to understand if anyone had any perspectives. Thanks.
Deal Addict
Aug 5, 2015
2071 posts
1360 upvotes
Montreal, QC
GoKartRacer wrote: Is there a reason people would "want" to go with RBC? At the end of the day, isn't this just a rate game of "let's get the lowest rate"? Is there a service that RBC provides that is superior to others? Since RBC has some of the highest rates, I can't see why folks wouldn't go elsewhere. Just wanted to understand if anyone had any perspectives. Thanks.
Excellent question. In my case, it's only because all of my banking is already there and I'll be getting a HELOC. I've got many third party accounts already linked to my RBC accounts, like Questrade. So basically, one advantage for me will be to be able to quickly widthdraw from my HELOC and fund investments. That being said, I bargained my rate a few weeks ago and signed two weeks ago @ 1.94%. The rate sucks and in retrospect I probably should have waited a little and get ~1.75% elsewhere.
Last edited by willy0275 on Sep 29th, 2020 4:35 pm, edited 1 time in total.
Happy Koodo Public Mobile customer :-)
Deal Addict
Feb 13, 2004
1165 posts
47 upvotes
MohammedN12523 wrote: I just got 1.87% with the amortization of 25 years on a $392,500 mortgaged amount (20% down) with RBC. Is that reasonable or should I push them for more?
Is this fixed or variable? If you're going with variable you should be able to get it down a bit lower. I know everyone's situation is different but we got pre-approved at 1.75%, and the mortgage specialist said "We can get you lower once you buy your property and we finalized", or something to that effect. I'd suggest saying you found options at 1.7% and would like them to match.
Newbie
Sep 28, 2020
7 posts
4 upvotes
Thanks for the replies so far, everyone.
willy0275 wrote: Unless you really want to be with RBC, you could get below 1.70% (or below) elsewhere in my opinion especially with your mortgage amount, you've got some nice bargaining power here. Of course we can't say for sure as we don't know your specifics.
I have all my personal and business banking with RBC so it would be nice to keep it all together. My credit score as provided by RBC's CreditView dashboard is listed at 829. I've reached out to them mentioning the 1.69% rate that people seem to be getting with HSBC. In my context over 5 years, it's a difference of $3,000 so I think they (might) go for it, hoping to leverage the fact that we have a relatively well amount of business on the small business side with them.
GoKartRacer wrote: Is there a reason people would "want" to go with RBC? At the end of the day, isn't this just a rate game of "let's get the lowest rate"? Is there a service that RBC provides that is superior to others? Since RBC has some of the highest rates, I can't see why folks wouldn't go elsewhere. Just wanted to understand if anyone had any perspectives. Thanks.
As mentioned above, I would like to stay with the same company to do all my banking in one place. I think it helps in terms of leverage as you become more of a valuable customer to them (with regards to business accounts, etc). I'm not that tied down to the point of paying more just for this but RBC has definitely pulled out a few tricks that have paid off from loyalty (i.e. converting all my points on USD card to Avion points when it was "policy" not to anymore).
Trigger wrote: Is this fixed or variable? If you're going with variable you should be able to get it down a bit lower. I know everyone's situation is different but we got pre-approved at 1.75%, and the mortgage specialist said "We can get you lower once you buy your property and we finalized", or something to that effect. I'd suggest saying you found options at 1.7% and would like them to match.
This is fixed. They gave me that number after I linked HSBC's website and said "this is where they are _starting_ at, I'd be hoping to get better than your competitors starting price.". I've since mentioned folks are getting 1.69% with HSBC and that I'd rather not have to reach out to HSBC and play the back-and-forth game.

I'm only closing in January, so I am trying to lock in a solid rate early and I'll continue to shop for the next few months. :)
Deal Fanatic
User avatar
Jul 4, 2005
6378 posts
833 upvotes
Ottawa
What type of rates are people getting for the RBC home equity plans? Aren’t these rates usually crappy at the big5? I’m getting quoted 1.89% 5y for a refinance that had 20% down from b lenders.
Jr. Member
Sep 12, 2008
186 posts
41 upvotes
Brampton
Was quoted 1.69% 4yr fixed at TD. Forgot to ask about cashback.
Member
Jul 21, 2009
273 posts
150 upvotes
Ottawa/Gatineau
1.99% fixed for 5 years - refinance via Homeline
Jr. Member
Sep 11, 2007
149 posts
110 upvotes
Question for you peeps. From a financial perspective, and given rates are so low right now, is it better to do a 30 year amort or 25 year. This is for a new house purchase.

I personally am leaning towards doing a 30 year, just because my payments then are so low. But I don't know how to consider interest rates in my argument. Any thoughts from anyone savvy?
Deal Addict
Aug 5, 2015
2071 posts
1360 upvotes
Montreal, QC
GoKartRacer wrote: Question for you peeps. From a financial perspective, and given rates are so low right now, is it better to do a 30 year amort or 25 year. This is for a new house purchase.

I personally am leaning towards doing a 30 year, just because my payments then are so low. But I don't know how to consider interest rates in my argument. Any thoughts from anyone savvy?
I'm not savvy but I think the common strategy here is that with rates so low, it's better to have the lowest mortgage payments as possible and invest the remaining money instead, you'd win over the long term because the odds of beating 1.7% on the stock market with bonds and stocks are very high. Now, rates might not stay that low forever so only you can decide how comfy you are with the idea.

I personally mix both, make higher payments and invest some money. I'm a bit of a cowboy on the stock market so it protects me partially against myself Face With Tears Of Joy
Happy Koodo Public Mobile customer :-)
Jr. Member
Sep 11, 2007
149 posts
110 upvotes
willy0275 wrote: I'm not savvy but I think the common strategy here is that with rates so low, it's better to have the lowest mortgage payments as possible and invest the remaining money instead, you'd win over the long term because the odds of beating 1.7% on the stock market with bonds and stocks are very high. Now, rates might not stay that low forever so only you can decide how comfy you are with the idea.

I personally mix both, make higher payments and invest some money. I'm a bit of a cowboy on the stock market so it protects me partially against myself Face With Tears Of Joy
Makes sense, thank you!
Member
Jul 30, 2012
431 posts
418 upvotes
GoKartRacer wrote: Question for you peeps. From a financial perspective, and given rates are so low right now, is it better to do a 30 year amort or 25 year. This is for a new house purchase.

I personally am leaning towards doing a 30 year, just because my payments then are so low. But I don't know how to consider interest rates in my argument. Any thoughts from anyone savvy?
willy0275 wrote:
I'm not savvy but I think the common strategy here is that with rates so low, it's better to have the lowest mortgage payments as possible and invest the remaining money instead, you'd win over the long term because the odds of beating 1.7% on the stock market with bonds and stocks are very high. Now, rates might not stay that low forever so only you can decide how comfy you are with the idea.

I personally mix both, make higher payments and invest some money. I'm a bit of a cowboy on the stock market so it protects me partially against myself Face With Tears Of Joy
GoKartRacer wrote: Makes sense, thank you!
I would say not as clear cut as outlined. 1) One has to judge personal discipline in regularly (monthly) investing (or simply) "saving" the difference. 2) Adjust your plan according to how interest rate movements are occurring through your term (both mortgage & stock market / investments).

In general, I would say a longer initial amortization is "better" because it allows you "more" flexibility in terms of whether you wish to increase your payment(s) (thus lower your mortgage interest) or continue with a regimented/automatic investment plan of the "difference". Additionally, if income circumstances change or interest rates move significantly higher, it may reduce the possibility of future refinancing.

Base Case below (numbers rounded):
Scenario A_$500K Mortgage_1.69% 5Y Fixed_25Y Amortization = $2,043 Monthly_$416K Balance @ Maturity_$38.7K Interest Paid
Scenario B_$500K Mortgage_1.69% 5Y Fixed_30Y Amortization = $1,770 Monthly_$433K Balance @ Maturity_$39.4K Interest Paid

Mortgage Balance Difference (B-A) = $17K + Interest Difference (B-A) $0.7K = $17.7K

You would have to meet (or exceed) this number ($17.7K) in Investment at the end of the 5Y Term (on Scenario B) for the 2 Amortization Options to "equal".

"Amortization Monthly Savings" (Amort A_$2,043 less Amort B_$1,770 = $273)

Taking the "Savings" difference (i.e. Beginning @ "$0" Savings_$273 invested monthly x 60 months) would require a +3.16% Annual return (over 5 years) on the savings reinvested monthly = $17.7K

The advantage "B" scenario is one would have the cash/investment verses "A" scenario that produces higher home equity (but no investment dollars).

There are several online calculators that can account for ROI's (Return on Investment) using variables (changes in annual return assumptions, etc). Individuals should use their own interest rate / return assumptions to decide.
Jr. Member
Sep 11, 2007
149 posts
110 upvotes
DealRNothing wrote: I would say not as clear cut as outlined. 1) One has to judge personal discipline in regularly (monthly) investing (or simply) "saving" the difference. 2) Adjust your plan according to how interest rate movements are occurring through your term (both mortgage & stock market / investments).

In general, I would say a longer initial amortization is "better" because it allows you "more" flexibility in terms of whether you wish to increase your payment(s) (thus lower your mortgage interest) or continue with a regimented/automatic investment plan of the "difference". Additionally, if income circumstances change or interest rates move significantly higher, it may reduce the possibility of future refinancing.

Base Case below (numbers rounded):
Scenario A_$500K Mortgage_1.69% 5Y Fixed_25Y Amortization = $2,043 Monthly_$416K Balance @ Maturity_$38.7K Interest Paid
Scenario B_$500K Mortgage_1.69% 5Y Fixed_30Y Amortization = $1,770 Monthly_$433K Balance @ Maturity_$39.4K Interest Paid

Mortgage Balance Difference (B-A) = $17K + Interest Difference (B-A) $0.7K = $17.7K

You would have to meet (or exceed) this number ($17.7K) in Investment at the end of the 5Y Term (on Scenario B) for the 2 Amortization Options to "equal".

"Amortization Monthly Savings" (Amort A_$2,043 less Amort B_$1,770 = $273)

Taking the "Savings" difference (i.e. Beginning @ "$0" Savings_$273 invested monthly x 60 months) would require a +3.16% Annual return (over 5 years) on the savings reinvested monthly = $17.7K

The advantage "B" scenario is one would have the cash/investment verses "A" scenario that produces higher home equity (but no investment dollars).

There are several online calculators that can account for ROI's (Return on Investment) using variables (changes in annual return assumptions, etc). Individuals should use their own interest rate / return assumptions to decide.
Wow - thanks!

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