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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.- T. J, w( i7 I
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.$ m; q% C+ O7 i2 Z
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.
2 G* `# H7 ]4 z3 \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."
) G' C4 Z$ X7 O$ f" W# lShortly 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.3 Y" P1 J6 U, u" N& S6 n
The 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.
, {, N5 {" i0 f5 ~( ]4 v/ h* HFriday's additional trim was credited to the morning's move by Finance Minister Jim Flaherty to allow the banks to offload as much as $25 billion of mortgages from their balance sheets to the Canada Mortgage and Housing Corp.4 P. y2 H! g! }
TD said this should reduce the banks' cost of financing, in turn allowing them to trim the price of loans./ }1 U, D& ]* r$ `& s3 M8 a1 b
"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.
q# _! N. j5 c7 _3 Q( N"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."
. Z5 M, ]0 X- c: e" g KFlaherty said the federal government will buy up to $25 billion in residential mortgages from the banks and shift them to CMHC.! ?% d n0 y* \5 G
"This is going to make loans and mortgages more available and more affordable for ordinary Canadians and businesses," said the finance minister.
Q) ?9 k: ] B2 E1 WSonia Baxendale, CIBC's chief of retail markets, called the government's action "positive." |
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