Prime Rate Drops To 4.25% With Govt. Help.

Canadian banks moved to lower prime lending rates today. The 2nd cut to prime rate in this week comes after the Canadian government moved to shore up the nation's banks by taking on some of their mortgages in a bid to ease higher borrowing costs. Canada Mortgage and Housing Corp (CMHC) will buy as much as C$25 billion in mortgages from the banks. CMHC is a government agency that insures mortgage loans for lenders.

Scotiabank and Bank of Montreal announced that prime lending rate will drop 25 basis points to 4.25% on Tuesday after the Canadian Thanksgiving holiday.

TD Bank and CIBC each offered 15 basis point reductions, which will bring their prime rates to 4.35 percent.

Other banks will follow soon. You can expect another 0.10% drop in TD and CIBC rates as well as the competition in the marketplace will force them to do so. unless the other 2 banks raise their rates by 0.10%.

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