Canada's Housing Bubble

Move will result in a 0.25 percentage point increase in the cost of a number of fixed-rate mortgage products that the bank offers

Apr 13, 2010 Tara Perkins theglobeandmail.com

Royal Bank of Canada (RY-T59.57----%) , the country's largest bank, has raised mortgage rates again.

The move, which will result in a 0.25 percentage point increase in the cost of a number of fixed-rate mortgage products that the bank offers, is likely to spark another round of rate hikes among the country's mortgage lenders.

RBC kicked off one series of hikes a little more than two weeks ago, and most experts said that was the start of a steady rise in mortgage rates.

At that time the cost of a five-year closed rate mortgage from RBC and many of its competitors rose by 0.60 percentage points to 5.85 per cent.

Tuesday's increase will raise the rate for a five-year mortgage from RBC further, to 6.10 per cent, effective Wednesday.

Royal Bank's Canadian mortgage portfolio amounted to about $148.5-billion in the latest quarter.

The banks say they are raising rates because their cost of funds is increasing.