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Bank of Canada raised rate to 1.25%
READ: Why banks are slow to lower lending rates, but quick to hike themBanks tend to raise their own prime rates after the central bank raises its key lending rate, which affects wholesale borrowing costs for the major lenders and the retail borrowing rates they charge consumers. The prime rate is used as a benchmark for variable-rate mortgages and some lines of credit. Consumers with a fixed-rate mortgage will be unaffected by the Bank of Canada’s move on Wednesday until it’s time for the borrower to renew the mortgage.
MORE: Your mortgage is about to get more expensiveThe major banks recently raised some of their fixed-rate mortgage rates to reflect their costs of borrowing on bond markets, which have more effect on longer-term mortgage rates than does the Bank of Canada’s overnight rate. As of Wednesday, several banks had posted five-year fixed-rate mortgages at 5.14 per cent — although lenders will often charge less than the posted rates. Posted fixed rates were lower for mortgages with shorter terms.
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