RBC Cuts Secured LOC Rates by 1/2%!

RBCKudos to RBC for taking the lead and cutting its secured line of credit (Homeline) rate.

Effective tomorrow, the rate will fall from prime + 1.00% to prime + 0.50% (for new customers).

Marcia Moffat, head of RBC Home Equity, says: “…We are…giving Canadians access to the best priced credit line in the market today.”

This is big news because it will undoubtedly put pressure on other lenders to cut their HELOC rates.  Secured LOCs have been stuck around prime + 1.00% since last fall when the credit markets blew up.

  1. Yes, same here, I’ve been with them at prime since 2007, and I am kind of scared that this means my rate will go up to prime + 0.5%

  2. Will TD backtrack and drop their rates since they just last month bumped them up (+1) as did Scotia??
    They say it’s because their cost of funding has gone up. So how is RBC funding their HELOC’s so different than everyone else.
    I guess I should start pestering them to drop the rates or is it senseless?

  3. Hi Houba, For an open, P+0.70% is pretty good, although there might be slightly better deals if you look hard. Depending on your situation, it may also make more sense to look at a closed variable below prime. If you need help deciding, a good mortgage planner can do the comparison shopping and help you lay out all the options.

  4. C,
    Here is my understanding.
    If you only have a LOC with RBC then they might reduce it to prime + 0.5% if you ask.
    If you have a fixed or variable mortgage attached to the Homeline then RBC will not lower the rate.

  5. Just create a new homeline segment… you can have up to 5 of them. It will be created at current rates (Prime + 0.5%).

  6. This is funny as i have been hearing for a couple months about how Scotia bank was raising their LOC rate to Prime + 1%. I just received my latest statement yesterday and it states that my LOC rate will be increasing from Prime to Prime + 1%, starting in December.
    I guess with RBC reducing theirs to Prime + 0.5%, the pressure will be on Scotia to “reduce” my newly increased rate??

  7. I have a HELOC with TD @ P+1 and when I signed 6 months ago, they told me that whenever the rates go down anywhere, they will try to match as they want to retain me since it will only cost me $75 to close the HELOC with them and jump to someone else.
    I just called TD, and it doesn’t look very good! They are already backing away from that statement, but since now they know I am willing to walk away, they promissed to speak to a manager and see what they can do. I will report back.
    The flexibility and freedom where the main reason I took out a HELOC to begin with.

  8. Well, that didn’t take too long! I just got a call back from a manager at TD telling me that they will not match!
    I guess it is time to walk over to RBC.

  9. How RBC is able to offer a decrease for HELOC?
    It’s because RBC increased recently the premium on the unsecured LOC by 1.75%.

  10. Unhappy, your post sounds more like sour grapes aimed at RBC than a constructive comment!
    RBC’s rate increases to unsecured debt makes some sense since unsecured debt defaults are way up. I understand that there has not been the same measurable increase in secured debt defaults like HELOC’s.

  11. regarding RBCs move: the p plus .5 % is for 1st position LOC’s. any thing not in 1st position is subject to rates as high as p plus 1.75%. That is what i was just told…

  12. If that’s the case, then why having a mass premium increase or decrease instead of using the tool that already exists: credit history . Let the premium change on a case by case basis. Is RBC having a real customer oriented attitude or just performing advertising?

  13. I just switched to RBC from TD Canada Trust, who have funded my HELOC for the past 13 years. I spoke with two different managers and pleaded my case quite persuasively (e.g. raise the rate for new customers, but leave existing ones where they are). They are relying on the legal wording “variable annual rate” to support their position even though in all of our discussions with the mortgage lenders the word “prime” was always used. “The variable rate is always based on prime”, they said. So, they have just lost 1/2M in business.

  14. Competition Rules, like you, I spoke to a couple of managers, and to no avail.
    I finally contacted RBC 2 days ago, and have started the process.
    For once, the disloyalty that the banks show to their customers, comes to bite them back.

  15. I just recieved notice that rates on unsecured lines of credit are going up 1% effective Jan 1 2010. I have been prime plus 2.25% for years. No going to prime plus 3.25%. I’m not sure how someone can do this after 25 years. They say they have to do it because money is getting expensive. Makes no sense to me.
    Time to dump them i think.

  16. I was holding out for Scotia to follow RBC, but that did not happen. I now plan to move my LOC to RBC. Has anyone done this recently? is the prime + .5 still on?

  17. CIBC didn’t lowered their rate either so I switched to National Bank. We used our broker and got prime + .60%. It is more than I was quoted at RBC but I got the All in One so it is better in my opinion. It is like the Manulife One where the interest is canceled out when you deposit your paycheque into it. So far so good with it.

  18. Yep. RBC still has P+.50. So does BMO. It peeves me that FirstLine and Scotia choose not to match. They could if they wanted to.
    That’s alright. National Bank will be getting all of my HELOC business. You get a lot for that extra 1/10%. Mabyn mentioned one above: interest cancelling. You also get free banking and full chequing privileges with the AIO line of credit. No other bank has anything close.


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