Source: The Canadian Press

Five of Canada’s major banks will reduce many of their posted mortgage rates by one-tenth of a percentage point, effective Tuesday.

The posted five-year closed mortgage rate, for instance, will fall to 5.49% annually at Royal Bank (TSX:RY), Bank of Montreal (TSX:BMO), Scotiabank (TSX:BNS), CIBC (TSX:CM) and Laurentian Bank (TSX:LB).

The Royal, which is Canada’s largest bank, took the lead in announcing the rate cuts on Monday as it often does. The other Canadian banks tend to follow within a day or two, in response to the same trends on bond markets.

This is the second time major banks have cut their mortgage rates since the beginning of August and follows a report Monday that Canadian home sales were down 6.8% in July from a month earlier.

Canadian banks raise or lower their rates for fixed-term mortgages in response to trends on the bond markets.

Variable-rate mortgages go up or down when the banks adjust their prime rates.

Prime rates last changed on July 20, rising by one-quarter of a point after the Bank of Canada increased its policy rate to 0.75%.