Quote:
Originally Posted by mrkajz44
The question I have in all this "lowering prime" stuff is: Is there a "floor" for the banks in which they cannot lower rates any further and still have reasonable profit?
Rates are already pretty low, and there are expenses incurred on all their lending products that they need to cover. Have we reached this "floor" and no matter how low the BoC goes, the banks simply cannot go any lower and still cover their costs (with some sort of margin of course)?
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Prime was as low as 2.25% prior to the increases in 2010. BoC raised rates by 0.75% and the banks followed suit... which is where Prime has been (3.00%) since 2010.
So yes I believe there is room for the banks to make concessions... they could lower rates but feel there is no need to make an immediate decision.