Banks move to trim prime rate further after Ottawa offers mortgage relief

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TORONTO — Canada's big banks are passing on more rate cuts to consumers and companies after credit markets freed up Friday in the wake of federal government help for the mortgage industry.
6 R3 d" b7 `& W2 V* JTD Canada Trust (TSX:TD) said it will lower its prime lending rate by 15-hundredths of a percentage point to 4.35 per cent, effective next Tuesday.
The Bank of Nova Scotia (TSX:BNS) announced shortly afterward that it is cutting its prime rate by a quarter-point to 4.25 per cent.
Chris Hodgson, Scotiabank's head of domestic personal banking, stated that: "At a challenging time in world financial markets, this reduction in interest rates reflects actions initiated by the Bank of Canada and the federal government."
6 m% P) U+ p- x% Z4 m* fShortly afterward, CIBC (TSX:CM) chimed in, matching the smaller TD trim in the prime rate - the benchmark for a wide range of lending to individuals and corporations.
The banks had come under fire earlier this week after they passed on only half of the 0.50-point cut in the Bank of Canada's overnight rate, which was part of a co-ordinated effort by major central banks to ease credit markets.
Friday's additional trim was credited to the morning's move by Finance Minister Jim Flaherty to allow the banks to offload as much as $25 billion of mortgages from their balance sheets to the Canada Mortgage and Housing Corp.
. n! Y8 R# l1 y6 u6 |TD said this should reduce the banks' cost of financing, in turn allowing them to trim the price of loans.
"Financial markets are very turbulent, and funding costs are still high," commented Tim Hockey president of TD Canada Trust, the retail arm of TD Bank.
"However, we anticipate that our cost of funds will decrease with the implementation of this program, and therefore wanted to take action that will benefit our customers directly."
. M  m2 k" W  J2 P( ~Flaherty said the federal government will buy up to $25 billion in residential mortgages from the banks and shift them to CMHC.
"This is going to make loans and mortgages more available and more affordable for ordinary Canadians and businesses," said the finance minister.
/ E! j/ s- `1 k* J1 \0 dSonia Baxendale, CIBC's chief of retail markets, called the government's action "positive."

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So far:

Scotiabank, BMO  cut 0.25 to 4.25
# t" y% n8 K* K7 w+ tTD, CIBC cut 0.15 to 4.35

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RBC cut 0.25 to 4.25
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