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FP says Big Six banks raise prime rates after BOC hike

2022-09-09 08:13 ET - In the News

See In the News (C-RY) Royal Bank of Canada

The Globe and Mail reports in its Friday edition that Canada's Big Six banks have increased their prime lending rates by 75 basis points to 5.45 per cent in response to the Bank of Canada raising its key policy rate to 3.25 per cent. The Post's Denise Paglinawan writes that Toronto-Dominion Bank, Royal Bank of Canada, Canadian Imperial Bank of Commerce, Bank of Nova Scotia, Bank of Montreal and National Bank of Canada cut their prime lending rates at 4.70 per cent prior to the announcement. The new prime rates came into effect Thursday. The hike in prime lending rate at Canadian banks indicates a higher starting point for lenders' loan calculations. Capital Economics' Stephen Brown said major lenders matching the BOC's policy rate by increases in their prime rates will mean an immediate jump in borrowing costs for many Canadians. He said the hike in interest payments is worth about 0.5 per cent of household income at a national level, but the costs are heavily skewed toward those with variable rate mortgages, as the increase will take a much larger share of their income. "This is likely to feed through to a reduction in household spending on goods and services and raises the downside risks to the economic outlook."

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