Prime Drops To 4%

"Experts" were wrong. Prime rate is down at 4%. TD Canada Trust was the first of big Canadian banks to move on interest rates this afternoon when it announced that it has lowered its prime lending rate by 35 basis points to 4%, effective Oct. 22, 2008. Two weeks ago, TD lagged other Canadian banks when they all made two reductions in their prime rates in the same week. TD bank cut its prime rate by only 15 basis points when the other banks lowered their prime lending rate by .25% to reflect the rate cuts by Bank of Canada.

Other Canadian banks followed Toronto-Dominion's announcement. Royal Bank of Canada, Bank of Nova Scotia, Bank of Montreal and National Bank of Canada cut their prime rate by 25 basis points to 4 percent, while Canadian Imperial Bank of Commerce, the fifth-biggest lender, reduced its rate 35 basis points to 4 percent after the interest rate policy announcement by Bank of Canada this morning.

Lower prime rate will mean some relief for the new home buyers or for people refinancing their mortgage, but the discounts that were available (IE prime -.75% deals) are not available anymore. This situation may change as lending between banks start to loosen up a little bit in the near future.

If you have mortgage at prime minus 0.75% (or better) you are laughing all the way to the bank to make that mortgage payment at 3.25%. Use the extra $$$ you save to pay off your mortgage faster.

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