The surprise interest rate cut by the Bank of Canada (BOC) last week was received with mixed reactions from different sectors, including many experts who think little impact will come out of the reduction.
“I don’t believe a quarter-point will make a significant difference,” Justin Kua, a real estate agent in Toronto said.
“First-timer buyers are already expecting low rates. It’s just giving people a little more confidence in being able to take on a mortgage.”
The BOC’s move to decrease the interest rate from 1% to 0.75% also did not budge most of the country’s largest banks.
Early this week, only Royal Bank, Bank of Montreal, and TD Bank moved their prime rates down to 2.85%. Royal Bank was the first one to announce the rate decline after BOC.
Spin Mortgage co-founder Steve Pipkey believes other banks remaining mum are likely trying to protect their lending margins.
He added that “the prime lending rate offered by Canadian banks usually moves in lockstep with the central bank's overnight lending rate and it's unusual for banks to only partially pass on the savings to consumers”.
The last time when big banks responded with an interest rate cut by the central bank was in December 2008, where they reduced up to 50 basis points to their prime rates.
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