This post was updated on Jan. 15, 2018, to reflect CIBC’s rate increase.

Canada’s largest bank has increased its fixed-rate mortgage rates, amid rising yields on the bond market and a strengthening economy.

RBC says its posted five-year fixed mortgage rate moved to 5.14% on Thursday, up from 4.99%. The bank’s special offer rate for a five-year fixed with a 25-year amortization moved to 3.54% from 3.39%.

RBC says the changes reflect the activity of competitors and costs for funds on the wholesale markets, as well as other costs and market considerations.

TD Bank followed suit on Friday, also raising its five-year fixed rate to 5.14%. This is the first time it has been above 5% since February 2014.

CIBC raised fixed mortgage rates by between 10 and 15 basis points, “in response to market conditions.” Its five-year fixed rate rose by 10 basis points to 4.99%, while the one- and two-year fixed rates moved 15 basis points to 3.29% and 3.24%, respectively.

Scotiabank said it is reviewing its rates and will likely soon make changes.

Yields on the bond market, where the big banks raise money, have been on the rise since late last year.

Plus, many economists predict the Bank of Canada may raise its key interest rate target next week—a move that would likely prompt the big banks to raise their prime rates. Increases in the prime rates push up the cost of variable-rate mortgages and other loans such as home equity lines of credit that are tied to the benchmark rate.

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More mortgage news

Laurentian Bank of Canada says the amount of problematic loans discovered in its mortgage portfolio has increased from $304 million to $392 million.

The lender says it has repurchased $180 million of the problematic mortgages, with further $88 million expected to be repurchased by the end of the lender’s second fiscal quarter.

The Montreal-based bank revealed in December that, through an audit of $655 million in B2B Bank mortgages it sold to one unnamed third party, it had initially planned to repurchase as much as $304 million of problematic mortgages.

Laurentian Bank’s chief executive said at that time that issues largely involved loans that were mis-flagged and it found no evidence of wilful wrongdoing. He added that a smaller percentage of the problematic mortgages involved a failure to obtain or properly store documentation such as proof of income needed to adjudicate the loan.

Laurentian Bank spokeswoman Helen Soulard says the mortgage repurchases are not expected to be material to the lender’s operations, funding or capital.

Originally published on Advisor.ca
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