The cost of loans linked to the big bank prime rates are headed higher in the wake of the Bank of Canada’s decision to raise its key interest rate target by a quarter of a percentage point.
The Royal Bank of Canada, Bank of Montreal, Canadian Imperial Bank of Commerce, and Bank of Nova Scotia say they are raising their prime rates by a quarter of a percentage point in the wake of the central bank decision.
The Canadian banks each raised their prime lending rates to 3.95% from 3.70%, effective Thursday.
The increase raises the cost of loans with interest rates linked to the prime rate such as variable-rate mortgages and home equity lines of credit.
Toronto-Dominion Bank also hiked its prime rate by a quarter of a percentage point to 3.95% and its mortgage prime rate by the same amount to 4.10%
The Bank of Canada raised its key interest rate target by a quarter of a percentage point to 1.75%. It was the fifth time since the summer of 2017 that the central bank has raised the trend-setting rate.