Update 28/1/15, 2p.m.: TD Bank has lowered its prime rate to 2.85 per cent effective January 28, according to its website. National Bank has also dropped its rate to 2.85 per cent, according to assistant vice president W. Mark Squire. National Bank's website, however, still lists three per cent as its prime rate -- and says it is current as of 2pm Thursday.
Update 29/1/15, 9:30a.m.: National Bank's website now shows the prime rate at 2.85 per cent, current as of 9am Thursday morning.
The big banks operating in the broker channel aren’t doing themselves any favours by refusing to drop their prime rates, despite some of their competitors already doing so.
At press time neither TD Bank nor National Bank had lowered their prime rates, despite the fact that both Scotia
and RBC have done so. The lack of action will likely have brokers frustrated over the missed opportunity.
“If they’re not keeping with the other banks, especially RBC, they are definitely going to lose business,” Kent Farnsworth of Mortgage Alliance
Simply Mortgages told MortgageBrokerNews.ca. “And the brokers who tend to utilize banks more than monolines are going to lose opportunities.”
RBC was the first to drop its prime lending rate to 2.85 per cent, a 0.15 per cent cut and Scotiabank quickly followed suit.
"We believe our announcement is a balanced approach which reflects our actual cost of funds and helps clients save money on products such as variable-rate mortgages, lines of credit and floating-rate loans," RBC said in a statement, according to the CBC. "Our decision was driven by a number of factors, including our wholesale funding costs, the competitive, operating and macroeconomic environments, and the Bank of Canada’s recent rate decision and its impact on other market rates across the yield curve."
The cuts come a week after the Bank of Canada slashed its overnight rate to ¾ per cent from its long-held benchmark of one per cent.
“The Bank of Canada today announced that it is lowering its target for the overnight rate by one-quarter of one percentage point to 3/4 per cent. The Bank Rate is correspondingly 1 per cent and the deposit rate is 1/2 per cent,” the Bank of Canada wrote in its official release. “This decision is in response to the recent sharp drop in oil prices, which will be negative for growth and underlying inflation in Canada.”