Bank of Canada drop rates 75 basis points

[Mike Oxlong]

Wow I had a feeling they were going to be dropping the overnight rate again but 75 basis points is huge. That is the biggest one time drop that I have seen.

It will be interesting to see if the banks follow suit and drop their rates as well. A couple months ago when the Bank of Canada lowered rates by 50 basis points they were reluctant to lower their rates and it took some convincing from the federal governement to get them to drop.

If they do drop those of you in a variable rate mortgage are going to see your mortgage payments drop once again.

http://www.bank-banque-canada.ca/en/...te_091208.html

http://ca.news.yahoo.com/s/capress/0...interest_rates
After reading this story it looks like TD is only dropping 50 basis points. (That puts PRIME at 3.5%)It will be interesting to see what the rest of the banks do. I'll update this thread as I get info from the lenders.

[Top Shelf]

Wow, that is pretty huge.

I guess the inflation concerns aren't as bad due to the drop in gas prices, but still, big cut

[Resolute 14]

Bah, happens right after I sign off on my new place...

[metallicat]

Excellent!

[Mike Oxlong]

Originally Posted by Resolute 14

Bah, happens right after I sign off on my new place...

Did you get a variable mortgage? If you did you will reap the benefits of this regardless. If you got a fixed rate those are directly affected by this anyways.

[newts]

Originally Posted by fotze

What is the lowest variable rate people are being offered currently?

Prime plus what?

May not be the lowest, but a friend of mine is seeing his bank tomorrow and they are offering Prime + .8, but they are also offering him 4 year fixed at 4.59. He's currently coming off a 5 yr fixed at 4.50.

They offered him this when his banks prime was at 4.0%, so the fixed rate they were offering was lower than the variable, which I thought was strange.

[Bobblehead]

My fixed mortgage is coming due in Jan (although I haven't received any notification from the bank about that, I'll need to remember to follow up) so this is good news for me.

[djwazzy]

Originally Posted by fotze

What is the lowest variable rate people are being offered currently?

Prime plus what?

I got Prime - 0.75% for 5 years on a fully open variable from Scotiabank, but that was back in September...

[Bertuzzied]

This won't affect us unless the major banks also drop their rates by 75 basis points.

[Bobblehead]

Originally Posted by Bertuzzied

This won't affect us unless the major banks also drop their rates by 75 basis points.

They were roasted when they didn't follow suit during the last drop.


Royal Bank has announced a new stock offering in an attempt to increase liquidity.
http://www.financialpost.com/story.html?id=1050259

RBC's "Tier 1 ratio" was about nine per cent, and "it seems like the market wants more," said Ohad Lederer, an analyst at Veritas Investment Research in Toronto. The RBC share issue could herald similar fundraising by a couple of other banks, Mr. Lederer said.

RBC said its Tier 1 capital ratio would rise to 9.9 per cent with the issue, or would rise to 10.1 per cent if the underwriters exercise the over-allotment option. The minimum Tier 1 capital ratio in Canada is seven per cent, but the big domestic banks range from 9.1 to 10.5 per cent.

The big banks complained about the ratios when the markets were hot, but they are in better shape because of them now.

Edit: perhaps this will fit better in the other finance thread.

[Bagor]

Originally Posted by djwazzy

I got Prime - 0.75% for 5 years on a fully open variable from Scotiabank, but that was back in September...

So, you're paying 3.25% at the moment?

[Bertuzzied]

Yup the banks screw us again. They are only given their consumers a 50 basis cut so the bank prime rate is 3.5%, which means they are making an extra .5% off us by not matching the central bank. We should be at 3% right now.

[simmer2]

Originally Posted by Bagor

So, you're paying 3.25% at the moment?

I signed on for exactly the same variable mortgage, Prime - 0.75%. My interest payment is 3.25%...I'm not sure if that is reflective of the new interest cut or not, I can't remember what prime was before.

[Bertuzzied]

Originally Posted by simmer2

I signed on for exactly the same variable mortgage, Prime - 0.75%. My interest payment is 3.25%...I'm not sure if that is reflective of the new interest cut or not, I can't remember what prime was before.

Your new rate will be 3.5%-.75% so 2.75%

[Bagor]

Two and half more years @ 5.15

[Fobulous]

Originally Posted by fotze

What is the lowest variable rate people are being offered currently?

Prime plus what?

I have the same deal that everyone else has mentioned... prime - 0.75%; however, my mortgage is through First National.

Mike Oxlong... any idea of whether or not First National will be dropping its lending rate by 0.75%? They have always been slow in implementing these changes...

[Bertuzzied]

Originally Posted by Bagor

Two and half more years @ 5.15

Remember the mortgage thread on here? I feel kinda of bad for people who decided not to get a secure line or credit and got a fixed rate mortgage instead. On a $300k secure line of credit you would only be paying $875/month(interest only).

[djwazzy]

Originally Posted by Bagor

So, you're paying 3.25% at the moment?

Yup, and hopefully 2.5 or 2.75% soon depending what Scotia will set prime to. I'm thinking I should throw all my money towards my mortgage now since you pay mainly interest at the beginning of the term.

[ShotDownInFlames12]

Scotia did offer the prime -.75 mortgage but they don't anymore (as of middle of October). Now the variable rate is P+1.0.

Good thing I took advantage of their prime-.9 mortage last year.

[Mike Oxlong]

Right now the lowest variable I have seen offered is Prime +.6%. I am interested to see if the banks keep this offering or if they are going to raise it to Prime plus 1 or higher. Prime less .75% was common a few months ago until they all dropped prime by .5%. All of a sudden variable rates were offered at Prime +1% and they just recently dropped to Prime +.6%.

I myself have Prime less .75% on a number of the mortgages I have. But like others have mentioned I got my mortgage at least a few months ago when Prime was at around 5%. People who have lower than Prime variable mortgages are getting screaming good deals right now. This is a good time to be putting extra money towards your mortgage especially if it is in the early stages of the mortgage. You will be saving yourself a lot of interest in the long run.

It looks like the banks are only going to drop their rates by .5% not the full .75%. That is the indication from TD so far anyways and they generally all do the same thing. I'll keep an eye on things and keep this updated.

I'll keep a special eye on First National as well for Fobulous.

Just to summarize. Yesterday Prime was 4%. If the banks drop .5% which looks like what is going to happen then Prime is now 3.5% so if you have Prime less .75% you are now paying 2.75%. Doesn't get much better than that. Even at Prime +.6 a rate of 4.1% isn't too bad either.

Just as a side note a lot of banks have dropped their fixed rates as well. I have seen 4.99% for a 5 year fixed. I am waiting to see if anyone goes lower than that.