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.
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