Forum

Broker news forum is the place for positive industry interaction and welcomes your professional and informed opinion.

Notify me of new replies via email
Mortgage Broker News | 29 Jan 2015, 11:10 AM Agree 0
The big banks’ decision to lower their prime rates – but not fully match the mark set by the Bank of Canada – was about balancing the economy, according to one bank analyst.
  • Vince Gaetano | 29 Jan 2015, 12:01 PM Agree 0
    There would be validity to this explanation IF the banks didn't drop rates by 25 bps on the savings side of the product sheet. This is simply a profit play by the banks and don't let anyone fool you into believing its not.
  • Jeff | 29 Jan 2015, 12:40 PM Agree 0
    I may be wrong here, bhen prime starts rising again, I doubt the banks will only partially raise the Prime rate. This is likely to be a permanent increase in the spread between the overnight rate and Prime, which will lead to permanent increased profits for the banks.
  • Layth Matthews | 29 Jan 2015, 02:34 PM Agree 0
    I think the Canadian Banks' hesitation to match the BOC's rate drop is strange and embarrassing for all concerned.

    Right or wrong, this rate cut was a preventive policy move to protect the Canadian economy. It is stimulative for consumers and businesses across the country - not least of which, the Canadian Banks!

    For them to resist matching the BOC rate drop both mutes and delays the effectiveness of this bold policy move, and appears to pad their profit margins - but in a very short-sighted way.

    Are they just being cautious because the banking system is in trouble? :)

    Withholding the full rate cut undermines the BOC, the whole Canadian economy, and ironically, the outlook for future bank performance along with it.
  • Gary | 29 Jan 2015, 02:39 PM Agree 0
    Jeff, you are absolutely correct...for years the spread between BOC prime and the banks' prime was 1.75%. When the BOC dropped a full point at once the banks only dropped 3/4%, which increased their spread (profitability) margin by 1/4%. Now they have increased that margin by another 10 basis points, which is huge when you are dealing in the numbers of dollars they deal in daily. Couple that with the drop in the interest that they are paying, and the profitability margin soars. And as soon as the BOC raises its prime, the banks will have theirs raised within seconds of the BOC announcement.
  • judy | 30 Jan 2015, 02:30 PM Agree 0
    All I can say about the way the banks have acted on this is it is abusive to their customers and SHAMEFUL!
  • Doug King | 30 Jan 2015, 03:55 PM Agree 0
    Balancing the economy? Really! This is about the Fab 5 lining it's pockets at the expense of those the BOC sought to help. No bank, no banker give a darn about anything but their bottom line. They say it's at the behest of the stockholders, but, who are their stockholders but their 'clients'? If they weren't so busy counting their cash, they'd maybe feel ashamed.
Post a reply