Mortgages ease a bit

Two of Canada’s major banks will reduce many of their posted mortgage rates by one-tenth of a percentage point, effective today.

The posted five-year closed mortgage rate, for instance, will fall to 5.49 per cent annually at RBC Royal Bank and BMO Bank of Montreal.

The banks’ six-month convertible mortgage and one-year closed mortgage remain unchanged at 4.55 per cent and 3.3 per cent, respectively.

The Royal, Canada’s largest bank, took the lead in announcing the rate cuts on Monday as it often does. The other Canadian banks tend to follow within a day or two, in response to the same trends on bond markets.

This is the second time RBC has cut its mortgage rates since the beginning of August and follows a report that Canadian home sales were down 6.8 per cent in July from a month earlier.

Its posted rates for mortgages with terms of two to 10 years will range from 3.55 per cent to 6.6 per cent.

Bank of Montreal’s move was similar, with a few variations. For instance, the seven-year fixed mortgage was 6.4 per cent at BMO and 6.45 per cent at Royal.

BMO also offers an 18-year fixed open mortgage, which will have a posted rate of 8.45 per cent, down 0.1 percentage point as of Tuesday. It also has a six-month convertible mortgage and a one-year closed mortgage that were unchanged.