Bank of Canada Raises Benchmark Rate

After more than a year at a record low level, Bank of Canada Governor Mark Carney raised the benchmark interest rate for the first time since 2007 by one-quarter percentage point to 0.5 per cent. This is the first time since 2007 that that rate has increased and the Bank of Canada is the first in the Group of Seven to do so since the financial crisis and recession began in 2008.

In a statement Carney emphasized that the increase should not be interpreted as just the first of more to come.

"This decision still leaves considerable monetary stimulus in place, consistent with achieving the 2 per cent inflation target in light of the significant excess supply in Canada, the strength of domestic spending and the uneven global recovery,'' the central bank said. ``Given the considerable uncertainty surrounding the outlook, any further reduction of monetary stimulus would have to be weighed carefully against domestic and global economic developments.''
[Source - mortgagebrokernews]

Watch a discussion on the rate increase from CBC News - Click Here.

TD led the way raising Prime to 2.5% with CIBC and RBC shortly afterwards. Many other banks and mortgage lenders have also followed with a .25% increase in the prime rate.

Big 6 Banks drop prime rate following Bank of Canada

Variable rate mortgage holders will be happy as the major banks reduced prime rate to 4.00% after the Bank of Canada reduced the key lending rate by another 1/4 point yesteraday.

Other lender's who have reduced their prime rates to 4.00% include: Laurentian Bank, Street Capital, Caisse Centrale Desjardins, Dominion Lending White Label, ATB Financial, Merix Financial, and Scotia Express.

If you are interested in purchasing a home soon, or your current mortgage is coming up for renewal and you would like to speak to a professional regarding fixed vs. variable rates, please contact Greg Barrow at gbarrow@dominionlending.ca. You can also try calling 416 807 7123. I would be happy to answer any of your questions.

BMO, RBC, CIBC, Scotia all Reduce Prime Rates

All the remaining major banks including: Royal Bank, CIBC, Scotiabank and Bank of Montreal announced on Friday a decrease of one quarter of one per cent in its Canadian dollar prime lending rate. The new rate is 4.25 per cent, effective Tuesday, October 14, 2008.

"We are pleased to offer this reduction in interest rates to ourcustomers, which we believe will reinforce confidence in the Canadian economy," said Chris Hodgson, Executive Vice-President and Head of Domestic Personal Banking (Scotiabank). "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."