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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.
7 G( C( F9 @$ r4 jTD 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.+ U M+ K8 z% ]/ k; W
The 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.* C; o- u3 Z% w( c) v
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.", E8 p; ]3 X* U3 C: 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.5 {$ F1 K( c/ N
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.
) Z$ l" D& Y d! U2 f% v0 B; hFriday's additional trim was credited to the morning's move by Finance Minister Jim Flaherty to allow the banks to offload as much as $25 billion of mortgages from their balance sheets to the Canada Mortgage and Housing Corp.
. H9 ~" D4 H% C& M( {$ \TD said this should reduce the banks' cost of financing, in turn allowing them to trim the price of loans.
" X2 l5 A. f+ ?5 z Z"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.' j: _' S& [$ e. q9 U4 G* b f
"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."2 a& l8 \3 L) ?4 Q& n
Flaherty said the federal government will buy up to $25 billion in residential mortgages from the banks and shift them to CMHC.4 E5 B. A/ _+ _7 [
"This is going to make loans and mortgages more available and more affordable for ordinary Canadians and businesses," said the finance minister.
+ n& h: y2 x$ @8 @Sonia Baxendale, CIBC's chief of retail markets, called the government's action "positive." |
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