Canadian banks reduce prime lending rates further on 100 Mortgages

The big banks in Canada are helping to free up the frozen credit markets by passing onto consumers the governments interest cut. CIBC and TD Canada said they will lower their prime lending rate to 4.35 percent and this will come into action on Tuesday.

Bank of Montreal, Bank of Nova Scotia and the Royal also announced shortly after that they will reduce their prime lending rates to 4.25 percent.

The banks had left Canadian consumers dismayed after they only passed on only half of the half-point cut of the Bank of Canada key rate, that came in a global co-ordinate effort by central banks to ease the credit markets and avoid a worldwide recession. When the banks were asked why they did not pass the whole half-point reduction on to its consumers they gave the reason that the markets were to volatile and raising money too costly to pass on the full Bank of Canada cut.

Canada’s Finance Minister Jim Flaherty has prompted the big banks to act on reducing further their prime lending rates by allowing the banks to unload as much as $25 billion of mortgages from their balance sheets to the Canada Mortgage and Housing Corp. This move will be beneficial in the bank’s lending to consumers as it will free up extra capital to the banks.

Source: lfpress.ca

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