BANKS QUICK TO RAISE RATES, NOT TO CUT THEM.

Banks apply all of increase, but have held back on cuts

The country’s major banks are passing on t he f ull weight of a 0.25-per-cent increase from the Bank of Canada, despite the fact that, on the way down, consumers only received a portion of the central bank’s discounts.

Vince Gaetano, a principal at mortgage broker monstermortgage. ca, questioned whether Canada’s major banks were gouging consumers with the move, which affects about a quarter of Canadians with a mortgage tied to prime.

“It’s quite simply greed,” said Gaetano. “There is always a focus on profits and getting more money out of the pockets of Canadians. The last Bank of Canada decrease of 0.25 per cent only garnered a benefit of 0.15 per cent to Canadian borrowers. This happened the last two rate decreases.”

Royal Bank of Canada was the first out of the gate with an increase, raising its prime lending rate from 2.7 per cent to 2.95 per cent. The other major banks followed with increases throughout the day.

“After careful consideration of a range of factors, we are increasing our prime lending rate in line with the Bank of Canada overnight rate by 25 basis points to 2.95 per cent, effective July 13,” RBC said in an email to the Financial Post. “The Bank of Canada Rate is one reference point that we use to set our prime rate and is not the sole driver of the bank’s funding costs. In a persistently low rate environment, funding costs have steadily increased over the past few years.”