The Bank of Canada raised it’s benchmark lending rate Wednesday, which marks the third increase in just over three months. The bump of 25 basis points brings the bank’s target rate for overnight loans between financial institutions to 1%. Canada’s largest banks have followed suit by raising their prime lending rate to 3%.
The increase in the prime lending rate will be noticed immediately by anyone who has loans that calculate interest according to the prime rate – such as variable mortgages or lines of credit. However, whether or not fixed mortgage rates will be affected is a different story. While the central bank has been raising its overnight rate since June, commercial banks and mortgage lenders have been lowering mortgage rates.