Mortgages: Royal Bank increases interest rates

Royal Bank (TSX: RY) announced Friday that its interest mortgage rate increase Monday. Increases, ranging from one to two tenths of a point, will apply to fixed rate mortgages with a maturity of one to five years.

The largest increase will be a mortgage with a fixed maturity of five years offered by the bank to 3.09 per cent, rising to 3.29 percent. This is a promotional rate falling below the regular rate of 5.14 percent.

The rate of the Royal for mortgages with a fixed maturity of one year will rise by 0.14 percentage point to 3.14 percent, while the rate for loans with fixed maturities of two, three and four years will be a good one-tenth of a percentage point.

Royal Bank is the first major bank in the country to raise interest rates for mortgages since its bond prices from Canada fell last month rates.

Canadian banks use the bond market to finance their loans, which means that other institutions would follow suit at the Royal.
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