Scotia Down to Prime

Scotiabank Scotiabank has followed BMO and become the 2nd major bank to announce prime rate on variable-rate mortgages.

RBC, CIBC, and TD are still advertising “prime +” but many of their branches are reportedly giving discretion down to prime.

The big banks are flush with cash right now–that they have to lend out.  Therefore, it may not be long before the other big three conform and officially announce prime on their variables.


Update:  After this post went live…

  • RBC, Canada’s biggest mortgage lender, cut their 5-year closed variable to prime.  Their open variable fell to prime + 0.70%.
  • First National, the biggest non-bank lender, also cut their 5-year variable to prime.
  1. …ditto to Matt…
    Rob – on your recent HELOC tweet, can you advise who is now @ P+75 or P+90?

  2. I got P + 0.9 for my line of credit portion in the RBC Homeline Plan. I was told the rate of line of credit portion can be reset anytime if it goes down.

  3. Hi Matt: The cost of capital and other funding costs are notably higher for HELOCs than they are for variable-rate mortgages.
    Jeff: National Bank, Laurentian Bank, and BMO, are some…
    John: Fixed rates have inched down a bit thanks partly to slightly lower bond yields.

  4. So banks get money for 0.25% and can’t make money lending it at 2.25% via a HELOC? That’s non-sense. Banks are just doing it because…well it’s still cheap you know. At least that’s what the way too young to know chap teller told me. I tried to explain that they never passed on the 0.5% that they got either and that the spread is still 2%…not to mention their profits. Then he got a bit nervous, obviously he only knows how to enter checks. They’re only raising them because they want to see more competitive, otherwise they should just prop up their prime rate and be transparent or recommend loping off some of the excess from the HELOC if it’s being held in reserve for us LOC users.

  5. Chris,
    To be clear, the cost of funding HELOCs is absolutely more than it is for variable-rate mortgages when reserve, risk, securitization, servicing, retention, and other factors are considered. That is not to say lenders couldn’t make money at lower rates. But the pricing spreads and competitive dynamics are quite different in the HELOC market.

  6. Rob, tell me how I can twist the arm of one of two banks I have a HELOC with to keep them honest at prime? What argument can I raise? Basically whomever can keep their rate at prime gets my debt and I don’t care which.

  7. yeah – with the RBC Homeline Plan, if you have a Prime + 0.9% HELOC segment, you simply need to sign a form and they’ll create a new segment for you at today’s lower rate. You can have up to 5 segments… very easy.

  8. Hi Rob,
    First of all I want to say your site is a terrific resource for me to obtain up to date information on mortgage market trends.
    My question is I have a HELOC with TD @ prime + 1%. I use the line to invest and renovate (flip) properties. What would be my best strategy to obtain a lower rate. Thanks in advance and keep up the great work!

  9. Chris: It’s really tough unless you have significant other business with them. Generally speaking, it’s a lot easier to negotiate on a term mortgage than a HELOC.
    Shawn: That’s very kind of you to say. Thank you. As a general statement, see what your personal bank can offer. Then speak with a mortgage planner to compare other alternatives. (There are indeed other alternatives, assuming you qualify.)
    C: It’s possible in two cases:
    1) If the branch is able to offer you discretion off their variable rates (occassionally they will/can but often they won’t/cannot);
    2) Through brokers. As of today, most high volume brokers can arrange prime minus…

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