Canada’s largest bank, Royal Bank of Canada, took up the lead recently and significantly lowered the interest rates on home equity credit lines. Now offering a variable rate of prime plus .50 percent, RBC is set to do battle with other banks on the secured lending market.
A home equity line of credit is a revolving mortgage product, which uses the equity (up to 80% of home value) as collateral, thereby offering a lower interest rate than unsecured credit. For the past couple of months, we’ve seen a flurry of special offers regarding secured credit lines, including refunding set up fees, waiving legal fees and other promotions.
RBC stands alone in lowering the offered rate on the secured line, a move that might be seen as a bit too costly for other banks to saddle up to. However, competition on a heavy hitting item like the secured credit line is likely to force Canada’s banks to follow suit and offer the same deal to their consumers.
