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Canadian Lenders Lift Prime Rate to 3.2% After Central Bank Hike

Updated on
  • Boost in lenders’ prime rate matches Bank of Canada’s increase
  • TD also lifting mortgage prime rate to 3.35% on Sept. 7

The cost of carrying consumer loans is going up after Canadian lenders including Royal Bank of Canada and Toronto-Dominion Bank raised their prime rates following Bank of Canada’s decision.

The country’s five biggest banks boosted the rates 25 basis points to 3.2 percent, effective Sept. 7. That followed a similar increase in July after the central bank raised rates for the first time since 2010.

Bank of Canada lifted its overnight rate 25 basis points to 1 percent earlier Wednesday, citing the need to remove “some of the considerable monetary stimulus in place," as the economy revs up. The country posted growth of 4.5 percent in the second quarter, top among its Group-of-Seven peers.

The prime rate at Canadian lenders typically sets borrowing levels on variable mortgages, credit lines and other loans, though Toronto-Dominion has a separate prime rate used for variable mortgages. That rate will rise 25 basis points to 3.35 percent, according to the bank.

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