Toronto-Dominion's mortgage rivals use gamesmanship on rate hikes

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Canada's big banks don't seem keen to follow Toronto-Dominion Bank's lead on mortgage hikes – at least not all the way.

Posted mortgage rates have diverged in the past week following rate hikes by Toronto-Dominion, Royal Bank of Canada, Canadian Imperial Bank of Commerce and National Bank of Canada. Bank of Nova Scotia and Bank of Montreal have stood pat – so far – creating a 45 basis-point difference on five-year fixed-term loans.

"This is very different from what we've seen in the past," Barclays Plc analyst John Aiken said. "It may be a bit of gamesmanship: TD and Royal were seeing how far they could lift mortgage rates for the group, but it doesn’t look like the others are playing ball."

CIBC, which expanded its mortgage book at a faster pace than the rivals in the past two years, lifted its posted rate for five-year mortgages by 15 basis points to 5.14%. That undercuts Toronto-Dominion's 45 basis point hike to 5.59% on April 25 in what founder Rob McLister called "the biggest move in years" for Canadian banks.

"This is a bit of differentiation in terms of strategy," Aiken said. "In the past CIBC has been growing their mortgage book at a faster pace than the rest of the peer group and it looks like they're trying to continue that."

Royal Bank, Canada's largest mortgage lender, and Montreal-based National Bank also undercut Toronto-Dominion's move, opting for a 20 basis-point hike on the five-year term to 5.34% this week. Bank of Montreal and Scotiabank have maintained posted rates at 5.14%, according to their websites.

"Scotiabank has not increased its posted mortgage rates since January," Lukas Gerber, a bank spokesman, said in an e-mailed statement. "Our number one focus is providing value for our customers – we manage our pricing very actively to do just that, using a variety of market benchmarks."

Banks generally give homebuyers better terms than their posted rates. Canada's big banks are offering unadvertised discretionary rates of 3.39% for five-year fixed mortgages and 2.75% for variable-rate mortgages, according to That's little changed from late January.

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