RBC announced it is dropping its variable mortgage rate effective today, February 9, 2010, to Prime – 0.1% or 2.15%. This is a “* special rate” (see below for details) which enables RBC to become the first bank to drop its variable rate below prime and is following the thoughts of our Mortgage Rate Panel Outlook, who believed that larger discounts to prime will be coming back in vogue over the next few months.

Mortgage brokers have been offering variable rates below prime for a few months now with the current 5 year variable on RateSupermarket.ca listed at 1.90% and the lowest rate we’ve seen to date is the 3 year variable rate down to 1.85%.

It’s still a very positive sign for mortgage shoppers, that a big bank is bringing the discount to prime back on its variable rates, and could be a signal of things to come if/when the other banks follow.

* Special offer conditions

For mortgages approved on or before February 28, 2010 funds must be advanced within 90 days of date of application in order to qualify for the Special Offer rate. Offer may be changed, withdrawn or extended at any time, without notice.

Applicable to residential mortgages only and subject to Royal Bank of Canada lending criteria for residential properties. Some conditions apply. Rates shown for the applicable term are Royal Bank of Canada’s special discounted rates and are not the posted rates of Royal Bank of Canada. Offer may be changed, withdrawn or extended at any time, without notice

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