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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.: |- r2 |8 ]6 R2 d/ R. K1 s
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.
4 {: V. q/ K% L) vThe 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.- [9 h0 U+ _0 l1 t, f. ~* g, Y( a
Chris 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."
1 d0 f# g/ D2 C7 }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 o! T6 E- j7 `6 E6 S6 }: {
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.. j( d8 y8 D9 ]! J) I, N
Friday'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.
2 o+ b8 R. z3 l" k- R9 P. i& J; mTD said this should reduce the banks' cost of financing, in turn allowing them to trim the price of loans.
" T( G& J9 Q u" L1 ?"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.
+ A) \0 L* ]1 B+ U' t+ O! @"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."# ], {; i. t5 P# p
Flaherty said the federal government will buy up to $25 billion in residential mortgages from the banks and shift them to CMHC.6 _/ s- L2 b* `/ }0 o6 x
"This is going to make loans and mortgages more available and more affordable for ordinary Canadians and businesses," said the finance minister.! A# `2 ^7 _0 F
Sonia Baxendale, CIBC's chief of retail markets, called the government's action "positive." |
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