Mortgage rate hike: banks quick on the trigger
September 16, 2017
Canada’s big banks, which had been slow to lower lending rates when the Bank of Canada cut its benchmark rate seven years ago, were quick to pull the trigger on raising interest rates following the second Bank of Canada hike in September.
Quickly, and in near unison, the Royal Bank of Canada, the Bank of Montreal, TD Bank, Scotiabank and CIBC all announced they were increasing their prime rates to 3.2 per cent from 2.95 per cent, where they had been since the central bank's last rate increase in July.
The prime lending rate is the rate that banks use to set interest rates for variable-rate mortgages, home equity lines of credit and other floating-rate loans.
The moves comes after the Bank of Canada raised its key interest rate September 5 to 1.0 per cent from 0.75 per cent.
More rate hikes could be coming, analysts said.
The Bank of Canada could bring in another rate hike before the end of the year, some forecast. “The broad tone of the [Bank of Canada] accompanying statement is generally balanced but it leaves the door wide open to further interest rate hikes,” said Derek Holt, head of capital markets economics at Scotiabank. “One should not rule out another hike over the duration of 2017.”