The big Canadian banks including RBC, TD, CIBC, Scotiabank and BMO all increased their Prime lending rates as expected by 0.25% to 2.75%, effective July 21, after the Bank of Canada’s rate hike earlier in th week.

Variable mortgage rates have gone up as well, including those offered by brokers, as previously the best mortgage rate for a 5 year variable closed was 1.75% and this has now increased to 2.00% (see below).

Prime & variable mortgage rates update

* as of July 21, 2010

Lender or broker	Prime rate	Change (%)	Variable mortgage rate	Change (%)	Get details
	2.75%	+0.25%	2.00%	+0.25%
	2.75%	+0.25%	2.60%	+0.25%
	2.75%	+0.25%	2.60%	+0.25%
	2.75%	+0.25%	2.60%	+0.25%
	2.75%	+0.25%	2.35% * current special offer	0%

You can compare variable mortgage rates near you here now.

Canada’s big banks followed the Bank of Canada’s interest rate cut today by 0.25% by dropping their prime rates by the same 0.25% as well. The following banks announced lower prime rates, which will all be effective tomorrow, April 22, 2009:

See how these rates stack up against the competition and compare mortgage rates now.

The Bank of Canada announced this morning that it is cutting interest rates by 0.50%. This take the target for the overnight rate to just 0.50% This takes the total easing to 4.00% since December 2007.

The bank said in it’s release that the global economic outlook has worsened since January with slower growth than expected in the major economies and the US recession with the weak car and housing growth is a big challenge for Canada. Q4 2008 also showed a sharp decline in Canadian economic activity.

They believe that the aggressive efforts of many countries will only begin to be felt in the 2nd half of 2009 and will build up through 2010, and Canada should be well placed to recover more rapidly than other industralized countries due to the underlying strength of the financial system and economy.

Interestingly they said that since rates are so low they need to look at other measures to stimulate the economy such as, “to provide additional monetary stimulus, if required, through credit and quantitative easing.” if its needed and will outline this in the next rate announcement on April 21st. This has meant effectively printing money in the US & UK so we’ll see how the Bank of Canada interprets quantitative easing.

The great news for mortgage shoppers is that some of the big banks have already announced they are decreasing their Prime rates by 0.5%. RBC, CIBC and BMO have already lowered t’s prime lending ate by 0.50% to 2.50% from 3.00%, effective March 4, 2009. Hopefully this will lead to lower variable mortgage rates as well.

Following the Bank of Canada’s drop in interest rates this morning by 0.5% Canada’s big banks followed suit and cut their prime rates by the same 0.50% to 3.00%. This will be welcome news to variable rate mortgage holders and those mortgage shoppers looking for variable rates.

The changes were as follows:

RBC Royal Bank – prime rate 3.00% effective January 21, 2009

TD Canada Trust – prime rate to 3.00% – effective January 21, 2009

CIBC lowered its prime rate to 3.00%, effective Jan. 21, 2009.

Bank of Montreal (BMO) lowered its prime rate to 3.00% – effective Jan. 21, 2009.

The fact that these mortgage lenders cut their prime rates so quickly and matched the 0.50% cut by the BoC is not only great news for variable mortgage holders, but also for all Canadians as it could indicate that interbank lending is starting to recover again. A few months back when the central bank cut rates, by 1%, many financial institutions either didn’t match the cut and only dropped rates by 0.25% or 0.50% or delayed any move for a few weeks.

This wasn’t for greedy or profit reasons, but mainly because the financial crisis meant that credit was tight and cash was at a premium, so interbank lending was minimal. This then increased the rates banks were lending to each other, and meant they couldn’t pass on the interest rate cut to their customers as their borrowing rates were higher than normal. Lets hope this is a sign of good things to come.

Compare mortgage rates to see the best variable mortgage rates in the market.

A few of Canada’s biggest banks lowered their prime rates immediately after the Bank of Canada (BoC) announced they were cutting the target for the overnight rate by 0.75% to 1.75%. However, the big news will be that they weren’t able to match the BoC’s cut. The Banks that have announced their new Prime Rates so far:

This will be good news for those on variable mortgage rates, however, it shows a more worrying sign that despite the BoC dropping the main lending rate, the big banks cost of funds are still higher than the are in “normal” circumstances, resulting in them not being able to pass the full rate on to customers.

We’ll wait with interest to see what the other banks do.

The Bank of Canada (BoC) announced that it is cutting its target for the overnight rate by 0.75% to 1.5% and follows the 0.75% cut in October 2008.

The BoC also reported that they believe the outlook for the global economy has worsened significantly in the past few weeks and will be broader and deeper than previously anticipated. The financial markets continue to strained despite the numerous measures taken by the major governments including the UK, US and the Eurozone which are increasing credit flows, although it will still take a long while for things to return to “normal”.

They also mentioned that core inflation is now less of a risk than it was in the past and that we are now definitely entering a recession as a result of global economic weakness, and people and businesses are now becoming more cautious.

Some of Canada’s big banks reacted to the Bank of Canada’s (BoC) 0.25% interest rate cut by dropping their Prime rates to 4.00% and this represented a cut of 0.25%-0.35% from their previous Prime rates. TD Canada Trust, Scotiabank, Bank of Montreal (BMO), CIBC, all moved to 4.00% which takes effect today, October 22, 2008, while the National Bank of Canada and RBC have kept their Prime Rates at 4.25% as of this morning.

TD stated that its “decision to lower its Prime by 35 basis points reflects today’s Bank of Canada rate change, as well as the decrease in our cost of funds due to government actions and market forces, allowing us to pass the benefits on to customers”.

The fact that the banks matched or exceeded the BoC’s rate cut is very good news as it implies that things may somewhat be returning to normal. The big banks failed to match the BoC’s 0.50% rate cut a few weeks back as their own costs of funds weren’t decreased due to the lack of interbank lending in the markets, and so couldn’t pass the savings onto customers.

The best variable rate we had on the site was 4.50% yesterday, so we’ll see if that changes today.

In a very positive response to the Canada Mortgage and Housing Corp’s (CMHC’s) announcement last week to buy up to $25 billion in insured mortgages from the banks, providing lenders with additional cash, giving them more money to lend to consumers and businesses, Scotiabank dropped their Prime Rate to 4.25%, down 0.25%, while TD Canada Trust lowered their’s by 0.15% to 4.35% effective yesterday, October 14th, as reported in the Toronto Star.

This followed the unusual move last week when the Bank of Canada dropped its target overnight rate by 0.50% and the Big Banks only decreased their Prime Rates by 0.25% whereas they would normally follow suit, as we reported here.

TD Canada Trust CEO Tim Hockey said, “We believe that this initiative will be put into effect in a way that will reduce our overall cost of funds and, as a result we are dropping our rate today. As we’ve been saying, a number of factors go into decisions about rate changes. Financial markets are very turbulent, and funding costs are still high. However, we anticipate that our cost of funds will decrease with the implementation of this program, and therefore wanted to take action that
will benefit our customers directly.”

This additional measure by the Federal government to minimize the effects of the global financials crisis means they have injected a huge $45 billion in additional cash into the financial system.

On RateSupermarket.ca, we didn’t see any declines in variable rate mortgages, as the best was still on at 4.50%, but we’ll see if there’s a drop today.

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.

The Bank of Canada decided to hold the target overnight rate steady at 3%.  They cited:

“Three major developments are affecting the Canadian economy:

Other interesting points include:

The statement also highlighted that inflation is expected to reach 4% in the 1st quarter of 2009, however, they expect energy prices to stabilize and come back down to earth at 2% in the 2nd half of 2009.

If the Bank of Canada believes that inflation will reduce in the next year this reduces the necessity to increase interest rates to control inflation, which is welcome news for variable mortgage rates holders.

Kelvin