Royal Bank of Canada (RY.TO) and Toronto-Dominion Bank (TD.TO) raised their posted five-year fixed mortgage rates, increasing borrowing costs for Canadian homebuyers ahead of the Bank of Canada’s interest rate decision next week.

RBC raised its posted five-year fixed rate by 15 basis points to 5.14 per cent, with more rate hikes across the board.

“Rate changes reflect recent activity by competitors, and the current costs that we incur for funds on the wholesale market as well as other costs and market considerations,” A.J. Goodman, director of external communications for RBC’s personal and commercial banking division, said in an email to BNN confirming the bank’s mortgage rate changes.

The mortgage rate hike comes just after the Office of the Superintendent of Financial Institutions’ new guidelines, called B-20, took effect on Jan. 1.

The new rules require prospective homebuyers putting 20 per cent or more down on their home to prove they can service their mortgage at an interest rate 200 basis points higher than the posted rate or the Bank of Canada’s five-year rate, whichever is higher.

TD Bank hiked its five-year fixed rate mortgage to 5.14 per cent on Friday, topping five per cent for the first time since February 2014, the bank confirmed in an email to BNN. 

"Factors that we consider when making mortgage rate changes include Bank of Canada rate changes and economic factors impacting the costs to fund mortgages, as well as the competitive environment," Cheryl Ficker, senior manager of corporate and public affairs 

CIBC also confirmed Friday afternoon that it was raising fixed mortgage rates between 10 and 15 bps "in response to market conditions," effective immediately.

Scotiabank (BNS.TO) says it is reviewing its rates "to ensure we remain aligned to the market" and will likely soon make changes.

The higher mortgage borrowing costs combined with OSFI's new rules may deter would-be homebuyers, says Lauren Haw, CEO of real estate brokerage Zoocasa.com.

"This rate hike isn’t large enough to make a big impact on the housing market on its own. The issue obviously is its compact with the new OSFI rules that are just coming into effect this January as well. So with the combination, we may see people waiting a little bit before they jump in," Haw told BNN on Friday.

The Bank of Canada is scheduled to release its rate decision on Wednesday, Jan. 17. 

The implied odds of the central bank hiking its overnight lending rate stood at more than 86 per cent on Friday morning.