Last week, in a surprise move, the Bank of Canada cut its overnight lending rate by 0.25 per cent from 1.00 per cent to 0.75 per cent to help soften the blow of falling oil prices on the economy.
The country’s Big Five banks (TD, Bank of Montreal, Bank of Nova Scotia, CIBC and Royal Bank) typically follow suit within 1 to 2 business days. However, this time, the Big Five and Canada’s sixth largest bank National Bank were slow to match the cut.
They announced on Tuesday that they will decrease their prime rate, but they did not pass all of the savings to customers. The six banks decreased their prime rate by 0.15 per cent from 3.00 per cent to 2.85 per cent effective Thursday.
Steve Pipkey, co-founder of Spin Mortgage, commented that it is uncommon for banks to pass on only part of the savings to consumers.