The Royal Bank of Canada was the first of the big banks to announce that it will increase its main lending rate after the larger-than-expected increase in the Bank of Canada’s benchmark rate.
RBC, TD Bank, Canadian Imperial Bank of Commerce, Bank of Montreal and Scotiabank will raise their preferred rates by a full percentage point to 4.70 percent, from 3.70 percent, starting Thursday. Preferential rates are tied to many types of loans, such as variable mortgage rates, home value lines of credit, and car loans.
It is typical to see that major Canadian banks follow in the footsteps of the central bank and adjust their interest rates preferentially.
“This means that anyone with a variable rate mortgage or a home value line of credit (HELOC) will see their rate increase accordingly. This group should calculate what their new payment will be with this rate hike. and also budgeting for new rises this year, ”James Laird, executive co-director of Ratehub.ca, said Wednesday.
“Anyone with a fixed-rate mortgage is not affected until their next renewal date. If that renewal date comes soon, they should start calculating their payments based on the rates available today.”
Earlier Wednesday, the Bank of Canada surprised Bay Street with a total rise, which raised its nightly rate to 2.50 per cent. It is the largest increase since 1998.