Bank of Canada cuts key rate by 0.25%

[Slava]

BMO also dropped to 2.85%. Interestingly, I read that the banks have never changed prime by less than 0.25% going all the way back to 1935. Their money grubbing knows no bounds these days though.

[Slava]

And CIBC and National Bank. Haven't heard from Scotia, and TD said they weren't reducing last week, unless they decide to follow suit.

[Mortgage Made Easy]

Originally Posted by Slava

And CIBC and National Bank. Haven't heard from Scotia, and TD said they weren't reducing last week, unless they decide to follow suit.

TD did match RBC's drop - announcement

[kevman]

It's a start... I'd still like to see the final 10bps. If the average debt of Canadians is $150,000 per household and there are approximately 10 million households that's $1.5x10^12 of loans on the books with Canadian banks. In that case that final .1% accounts for $1.5 billion/year extra revenue in the banks hands that was intended to be passed onto the consumers.

[cam_wmh]

What's an easy website to see all Canadian banks prime rates?

[Slava]

Ratespy.com has all kinds of rates for all kinds of products, but I'm not sure if it shows just plain prime. Probably though as they seem to have everything else.

[Mr.Coffee]

All I know is that I am an idiot, and 1.5 years ago decided to go hard and went fixed for like 10 years. Got an okay rate, but looking at rates now...........

That one's going to cost me it looks like. Brutal, and I thought I was so clever.

[blankall]

Originally Posted by Mr.Coffee

All I know is that I am an idiot, and 1.5 years ago decided to go hard and went fixed for like 10 years. Got an okay rate, but looking at rates now...........

That one's going to cost me it looks like. Brutal, and I thought I was so clever.

It may be worth it to pay the penalty and break your mortgage. One day I saw my girlfriend's parents had their mortgage at some ridiculous 6% rate. They cut down to 3%, which made the fine for breaking the mortgage well worth it.

[blankall]

Originally Posted by kevman

It's a start... I'd still like to see the final 10bps. If the average debt of Canadians is $150,000 per household and there are approximately 10 million households that's $1.5x10^12 of loans on the books with Canadian banks. In that case that final .1% accounts for $1.5 billion/year extra revenue in the banks hands that was intended to be passed onto the consumers.

A lot of people are on fixed rates. A lot of that debt is from non-mortgage sources that are also not variable.

[DoubleK]

Originally Posted by Mr.Coffee

All I know is that I am an idiot, and 1.5 years ago decided to go hard and went fixed for like 10 years. Got an okay rate, but looking at rates now...........

That one's going to cost me it looks like. Brutal, and I thought I was so clever.

8.5 years from now you might look like a genius.

[blankall]

Originally Posted by DoubleK

8.5 years from now you might look like a genius.

good point. Are they still giving out 10 year terms?

[MillerTime GFG]

Originally Posted by blankall

good point. Are they still giving out 10 year terms?

Yep, they start at 4.29% give or take. But ya, like DoubleK said, a lot can change in the next 8.5 years.

[codfather]

[QUOTE=kevman;5109667]It's a start... I'd still like to see the final 10bps. QUOTE]

I've seen this posted in a couple of the sub-forums but not here so I figured I'd bump this. The Bank of Canada has dropped their overnight lending rate by 0.25%.

Kevman has finally gotten his wish as TD has announced a drop to their rate by the final 0.1% they didn't give during the last cut. Unfortunately this means they are keeping the full 0.25% from this cut... I haven't heard anything about the other banks yet so we'll see what they do, but I'm guessing they'll follow TD's lead.

http://www.cbc.ca/news/business/bank...-low-1.3152673

Given that the banks have been doing fine, I'm having trouble understanding why the Bank of Canada would cut the rate. Given what happened last time, it really shouldn't be surprising that the banks have not passed this savings along to consumers. I guess it did incentivize at least TD to drop their rate by the 0.1% missed last time but they've gained 0.25% on their spread overall. When the Bank of Canada starts increasing rates again, a lot of gears are going to grind when the banks follow suit.

[polak]

I just signed my mortgage for 2.14% fixed. Haven't taken possession yet though so I should be able to still get it down if my bank drops it, hey?

[Locke]

This is the opportunity for people to start paying down credit cards and credit lines and get that leverage down to manageable levels.

[I_H8_Crawford]

[QUOTE=codfather;5367839]

Originally Posted by kevman

It's a start... I'd still like to see the final 10bps. QUOTE]

I've seen this posted in a couple of the sub-forums but not here so I figured I'd bump this. The Bank of Canada has dropped their overnight lending rate by 0.25%.

Kevman has finally gotten his wish as TD has announced a drop to their rate by the final 0.1% they didn't give during the last cut. Unfortunately this means they are keeping the full 0.25% from this cut... I haven't heard anything about the other banks yet so we'll see what they do, but I'm guessing they'll follow TD's lead.

http://www.cbc.ca/news/business/bank...-low-1.3152673

Given that the banks have been doing fine, I'm having trouble understanding why the Bank of Canada would cut the rate. Given what happened last time, it really shouldn't be surprising that the banks have not passed this savings along to consumers. I guess it did incentivize at least TD to drop their rate by the 0.1% missed last time but they've gained 0.25% on their spread overall. When the Bank of Canada starts increasing rates again, a lot of gears are going to grind when the banks follow suit.

BoC cut the rate as Canada is technically in a recession now - lower GDP for 2 straight quarters.

IMO it is a myopic move, as yes, this could help increase consumer spending, but it looks to me like it will be more artificial spending - it will help inflate real estate values (cheaper mortgage = people paying more for the same place with same monthly payments), but with the Canadian population already drowning in debt, this looks like throwing some crack out into the middle of East Hastings & Main... I personally don't see this ending well.

Not to mention that they are going to completely tank our dollar.

[Fire]

Originally Posted by Locke

This is the opportunity for people to start paying down credit cards and credit lines and get that leverage down to manageable levels.

No, it's time for people to get into more debt. Duh!

[Locke]

Originally Posted by Fire

No, it's time for people to get into more debt. Duh!

Ha! Yeah, no green text needed on that one.

I understand the normal Greenspanian economic theory of lowering interest rates when you want people to borrow money in order to spend it and kick-start the economy, but the best decision right now for people who are cash-strapped and job hunting is to take the low rates, consolidate outstanding leverage and pay it down.

Because from here its most likely that rates are only going to go up, so if people leverage themselves to the hilt right now they'll get shoved over the cliff when the rates go up.

[peter12]

So now the house-flipping will heat up even more in Vancouver and Toronto, and middle-class owners will take on even more debt. I don't see the BoC's line of reasoning on this cut.

[I_H8_Crawford]

Originally Posted by peter12

So now the house-flipping will heat up even more in Vancouver and Toronto, and middle-class owners will take on even more debt. I don't see the BoC's line of reasoning on this cut.

It wouldn't shock me if there was some political pressure on them to drop rates now - hopefully increase some consumer spending, make the economy look a bit better in time for the election...

Next rate announcement comes soon before the election, and it would probably look bad on the government if the rate were to be dropped then instead of now... people going to the polls would definitely remember an announcement that rate is dropped b/c of recession a few weeks before election, vs. doing it now, months before said election.