Personal Finance

RBC cut prime rate to 2.85% from 3%

  • Last Updated:
  • Jan 31st, 2015 1:23 am
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68 replies
Deal Addict
May 23, 2009
3681 posts
2388 upvotes
Mississauga
What happened to the remaining 10 basis points? Profit?
Deal Fanatic
Dec 6, 2006
5805 posts
1972 upvotes
Toronto
Better to nothing I guess.
Sr. Member
Apr 28, 2014
675 posts
185 upvotes
Oakville, ON
The largest lenders are RBC and TD; now that RBC has moved down 15bps, everyone else has to match or lose market share - which we should see over the course of this week
Sr. Member
Apr 28, 2014
675 posts
185 upvotes
Oakville, ON
bubuski wrote: What happened to the remaining 10 basis points? Profit?
The Net Interest Margins of the Big Five have been declining over the last several years - so it looks like they will pass 15bps on to customers, and keep the remaining 10bps for the shareholders
Deal Fanatic
Dec 6, 2006
5805 posts
1972 upvotes
Toronto
Hopefully my variable mortgage application will get approved in time with the current p-minus discount.
Deal Addict
Oct 3, 2005
1262 posts
73 upvotes
What a scam by the big banks! It should follow the BoC rate, its always been 2% above prime...I understand everyone's right to make a profit like the oil companies typically do but this doesn't feel right. Banks are still making record profits, just feels like a money grab no? As now they are taking 2.1 % above the BoC prime rate.
Sr. Member
Apr 28, 2014
675 posts
185 upvotes
Oakville, ON
hello99 wrote: What a scam by the big banks! It should follow the BoC rate, its always been 2% above prime...I understand everyone's right to make a profit like the oil companies typically do but this doesn't feel right. Banks are still making record profits, just feels like a money grab no? As now they are taking 2.1 % above the BoC prime rate.
BoC prime and Big Five prime should move in tandem and maintain that 2% spread, but there is nothing that legally obligates them to maintain that spread.

You want to talk about scams - an unsecured Line of Credit is priced based on Bank Prime and a Percentage Rate which makes a Base Rate; the bank then adds or subtracts a variance to arrive at the customer rate. And in the contract for those Lines of Credit, the banks say they reserve the right to amend the Percentage Rate at any time.

So, Bank Prime goes down 15bps, but the banks decide to amend Percentage Rate and increase it by 15bps - thus, Line of Credit customers see no savings.

The banks did this back in 2008 under the argument that their costs of funding have increased and they must pass that cost on - they can do it again now.
Sr. Member
User avatar
Feb 2, 2005
976 posts
136 upvotes
Your move Scotiabank. How about the extra 10bps? If they did they could increase market share and come out smelling like roses. Yeah right.
Sr. Member
Apr 28, 2014
675 posts
185 upvotes
Oakville, ON
T-Bone wrote: Your move Scotiabank. How about the extra 10bps? If they did they could increase market share and come out smelling like roses. Yeah right.
*Checks the current weather report for Hell*

Nope, no snow as of yet
Sr. Member
May 29, 2006
691 posts
225 upvotes
Now the debt junkies can stop all their crying wahhhhhhh
Sr. Member
Sep 25, 2006
598 posts
58 upvotes
Ottawa
When will other smaller lenders and trust drop their prime as well?

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