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TORONTO — Canada's big banks are passing on more rate cuts to consumers and companies after credit markets freed up Friday in the wake of federal government help for the mortgage industry.
# k2 _+ l( D, c. R5 i& p6 y. }TD Canada Trust (TSX:TD) said it will lower its prime lending rate by 15-hundredths of a percentage point to 4.35 per cent, effective next Tuesday. Q) }2 u/ g3 }( y* V8 C: W
The Bank of Nova Scotia (TSX:BNS) announced shortly afterward that it is cutting its prime rate by a quarter-point to 4.25 per cent.$ h, F+ _: y8 l E' ~" t% |1 b
Chris Hodgson, Scotiabank's head of domestic personal banking, stated that: "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."
8 F. F8 D/ K* O0 R/ {Shortly afterward, CIBC (TSX:CM) chimed in, matching the smaller TD trim in the prime rate - the benchmark for a wide range of lending to individuals and corporations.
& f9 x1 K: T/ x! `5 l |* MThe banks had come under fire earlier this week after they passed on only half of the 0.50-point cut in the Bank of Canada's overnight rate, which was part of a co-ordinated effort by major central banks to ease credit markets.
+ M$ a' R1 Q/ O2 f. MFriday's additional trim was credited to the morning's move by Finance Minister Jim Flaherty to allow the banks to offload as much as $25 billion of mortgages from their balance sheets to the Canada Mortgage and Housing Corp.$ Z) k3 j" n r' w% w! ]3 y
TD said this should reduce the banks' cost of financing, in turn allowing them to trim the price of loans./ k% ~" R& M; n: u7 V
"Financial markets are very turbulent, and funding costs are still high," commented Tim Hockey president of TD Canada Trust, the retail arm of TD Bank.
# ]% t# M: g0 H& I$ L5 Y"However, we anticipate that our cost of funds will decrease with the implementation of this program, and therefore wanted to take action that will benefit our customers directly."
/ f: G5 O. h" U0 @% a. Q- MFlaherty said the federal government will buy up to $25 billion in residential mortgages from the banks and shift them to CMHC.
; J1 G/ b+ W9 p* b; o `0 P. B"This is going to make loans and mortgages more available and more affordable for ordinary Canadians and businesses," said the finance minister.
* A# B$ A4 w) e8 h# ?* d' Z5 M9 gSonia Baxendale, CIBC's chief of retail markets, called the government's action "positive." |
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