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:
- TD Canada Trust: Lowered prime lending rate by 0.5% to 3.5% – effective December 10, 2008.
- CIBC: Lowered prime lending rate 0.5% 4.0% to 3.5% per cent effective Wednesday, December 10, 2008.
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.