After yesterday’s coordinated move by global central banks to decrease interest rates by 0.50%, including the Bank of Canada, some of the big Canadian banks announced drops in their Prime Rates – but only by 0.25%. The big banks that did this include Royal Bank of Canada (RBC), TD Canada Trust, CIBC, ScotiaBank, Bank of Montreal (BMO), and the National Bank of Canada (NBC).
This means that the Prime rate for these banks is now 4.50% versus 4.75%. Typically following a BoC rate decrease, banks would follow suit, but as these are extraordinary times their cost of borrowing has increased and they can’t pass on the normal savings to customers through lower rates.
As TD Canada Trust stated in their announcement:
“Like all financial institutions, we have been watching the key lending rates very closely. Continuing market turmoil has steadily driven up the cost of borrowing for financial institutions. This makes it challenging to match the Bank of Canada rate cut at this time. We recognize the efforts the Bank of Canada is making and, despite the fact that our cost of funds remains high, we have decided to reduce our rate by 25 bps. We see this as a balanced move in managing our funds and passing along the intended benefits to our customers.”
After yesterday’s BoC rate cut, the best variable mortgage rate remained at 4.25%, and we’ll keep an eye on this to see if it changes in the next few weeks.
You can go compare mortgage rates now to see the latest rates.
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