Bank of Canada cuts prime to .25% record low

The Bank of Canada reduced the prime rate to .25% the lowest on record. The bank said that this is the lowest they can go. The major banks have all announced that they will be following suit and lowering their prime lending rates by .25% tomorrow, Wednesday April 22nd, to 2.25% which is also the lowest rate on record. The bank prime rate of 2.25% is the rate that banks will offer to their 'best' customers.

Mortgage interest rates are directly related to the prime rate, so mortgage rates should fall nearly across the board given this new benchmark. I wouldn't hold my breath to see the interest rates ALL fall by .25% tomorrow. This is just another opportunity for the banks to make a little more money by not reducing rates across the board by .25%

As a test, let's choose the Royal Bank as an example. I don't mean to pick on RBC but they are the largest bank in Canada and my experience is that they are the stingiest on offering good rates to their customers compared to TD/CT or HSBC and ING etc.

Their current 'specials' are


Mortgage Term
Special offers‡
6 month convertible 4.55%
4 Year 4.09%
5 Year at 4.15%

posted RBC rates are:

6 Month posted rate is 5.05% and they will give you 4.55%

Term Posted Rate Special Offers‡
1 Year 4.20% 3.70%2
2 Year 4.35% Call for details
3 Year 4.45% Call for details
4 Year 5.14% 4.09%3
5 Year 5.45% 4.15%4
7 Year 6.90% 5.45%5

5 year closed is RBC Prime Rate + 0.80%

and 5 year open rate is RBC Prime Rate + 1.00%

Should be interesting to see what their rates are later in the week.\

To be fair to the Royal and for comparison purposes, here are TD/Canada Trust Rates

Special Offers1
RatesAPR-->
5 Year Closed Variable Interest Rate Mortgage
3.300% 2
3.300% 3
-->
1 Year Fixed Rate Mortgage
3.200% -->
4 Year Fixed Rate Mortgage
4.090% -->
5 Year Fixed Rate Mortgage
4.150% -->
7 Year Fixed Rate Mortgage
6.130% 4

-->
7 Year Fixed Rate 7% CashBack Mortgage

6.700%
5

10 Year Fixed Rate 7% CashBack Mortgage

6.700%
5

-->
5 Year Fixed Rate Green Mortgage
4.450% -->
10 Year Fixed Rate Mortgage7
5.250%

For more information please contact A. Mark Argentino
Fixed Rate Mortgages4
Term
Closed
Convertible
Open
4% Cash Back
5% Cash Back
7% Cash Back
No Down Payment
-->
Term
Closed
Convertible
Open
4% CashBack
5% CashBack
6 mo

4.900%



1 yr
4.200%

7.150%


2 yr
4.700%




3 yr
4.900%




4 yr
5.140%




5 yr
5.450%



5.450% 1
6 yr
6.300%



6.300%
7 yr
6.700%



6.700%
10 yr
6.700%



6.700%

5 Year Closed Rate is TD Mortgage Prime + 0.80%. TD Mortgage Prime is 2.50% Effective Date April 1, 2009

5 Year Open Rate is TD Mortgage Prime + 1.00%. TD Mortgage Prime is 2.50% Effective Date April 1, 2009

A. Mark Argentino, Broker, P.Eng.,
Specializing in Residential & Investment Real Estate
RE/MAX Realty Specialists Inc., Brokerage
2691 Credit Valley Road, Suite 101, Mississauga, Ontario L5M 7A1

BUS. 905-828-3434
FAX. 905-828-2829
E-MAIL: mark@mississauga4sale.com
Website: Mississauga4Sale.com