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Mortgage Lenders Set for New Rate War as Big Banks Cut Prime Rates

Joannah Connolly
January 27, 2015

Canada’s big banks seem on the brink of a renewed mortgage rate war as four of them – Royal Bank of Canada (RBC), TD, CIBC and BMO – cut their prime lending rates to 2.85 per cent from 3 per cent January 27, following the Bank of Canada’s surprise interest rate cut January 21.

As of January 27, RBC has so far been the only bank to reduce its five-year fixed mortgage rate, down to 2.84 per cent for qualified borrowers. However, the past two days have seen widespread media speculation that other big banks will follow suit to compete with RBC.

On January 26, following RBC's five-year rate cut, mortgage rate website RateSpy.com revised its estimate of the five-year fixed rate that big banks will offer their most qualified borrowers, down to 2.84 per cent from 2.89 per cent, in anticipation of banks following RBC's lead.

TD Bank’s January 27 decision to cut its prime lending rate is an about-face from its initial reaction to the BoC’s overnight rate reduction. TD’s official statement January 22 said that the bank would not be cutting its prime rate.

“Yesterday’s announcement by the Bank of Canada was unexpected … Our decision not to change our prime rate at this time was carefully considered and is based on a number of factors, with the Bank of Canada’s overnight rate only being one of them.”

Joannah Connolly
Joannah Connolly is editorial director of Glacier Real Estate, Glacier Media's real estate division. Joannah writes and curates real estate news for Glacier Media's local newspaper websites, including the Vancouver Courier, North Shore News, Burnaby Now, Tri-City News and others. She also oversees editorial content in Real Estate Weekly Homes, West Coast Condo, Western Investor and Glacier's special real estate publications. A dual Canadian-British citizen, Joannah has 22 years of journalism and editing experience in Vancouver and London, with a background in construction, architecture, healthcare and business media. Joannah has appeared on major local TV outlets as a real estate commentator, has moderated and spoken on various industry panels, and spent two years hosting the Real Estate Therapist radio show on Roundhouse Radio.