Canadian banks are lowering their prime rates after the Bank of Canada cut its benchmark rate for the first time in four years.
Banks including RBC, TD, BMO, CIBC and Scotiabank have lowered their rates to 6.95 per cent from 7.2 per cent, effective June 6, as have other financial institutions including Desjardins Group and Laurentian Bank.
The rate drop matches the quarter-percentage-point cut made by the Bank of Canada to bring its benchmark rate down to 4.75 per cent.
Prime rates help determine lending rates from banks on everything from variable-rate mortgages to lines of credit.
The 2.2 percentage points banks have maintained on top of the central bank benchmark rate is on the higher end of where it’s been in recent decades.
From the mid-1990s to 2008, the added bank margin averaged around 1.5 per cent. It rose to 1.75 per cent until around 2015, and since then has stood at around two per cent added to the benchmark rate.
This report by The Canadian Press was first published June 5, 2024.
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