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TORONTO — Canada's big banks are passing on more rate cuts to consumers and companies after credit markets freed up Friday in the wake of federal government help for the mortgage industry.) d* M3 p/ O8 a0 b _# Q
TD Canada Trust (TSX:TD) said it will lower its prime lending rate by 15-hundredths of a percentage point to 4.35 per cent, effective next Tuesday.
; ]$ a; h9 O, J6 b! S5 O$ F1 aThe Bank of Nova Scotia (TSX:BNS) announced shortly afterward that it is cutting its prime rate by a quarter-point to 4.25 per cent.
: J' `! a1 U" @! I3 oChris Hodgson, Scotiabank's head of domestic personal banking, stated that: "At a challenging time in world financial markets, this reduction in interest rates reflects actions initiated by the Bank of Canada and the federal government."! b* \. S% y0 F8 m0 e, O1 j+ ^( s( v$ n
Shortly afterward, CIBC (TSX:CM) chimed in, matching the smaller TD trim in the prime rate - the benchmark for a wide range of lending to individuals and corporations.1 T1 E! ?. T, B
The banks had come under fire earlier this week after they passed on only half of the 0.50-point cut in the Bank of Canada's overnight rate, which was part of a co-ordinated effort by major central banks to ease credit markets.
0 U6 O# w0 L1 XFriday's additional trim was credited to the morning's move by Finance Minister Jim Flaherty to allow the banks to offload as much as $25 billion of mortgages from their balance sheets to the Canada Mortgage and Housing Corp.
9 W! \& _. k+ NTD said this should reduce the banks' cost of financing, in turn allowing them to trim the price of loans.( g0 ?/ p5 x2 i2 i3 K
"Financial markets are very turbulent, and funding costs are still high," commented Tim Hockey president of TD Canada Trust, the retail arm of TD Bank.
& k1 Z- ]# ?. \"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."4 S' ^ F4 L% G
Flaherty said the federal government will buy up to $25 billion in residential mortgages from the banks and shift them to CMHC.
+ Z+ B z3 b3 B4 ? }6 V"This is going to make loans and mortgages more available and more affordable for ordinary Canadians and businesses," said the finance minister.
2 Y7 q1 _' d7 J* E2 w USonia Baxendale, CIBC's chief of retail markets, called the government's action "positive." |
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