8
TORONTO — Bank of Montreal is hiking its residential mortgage rates by up to 85 basis points, joining Royal Bank of Canada, TD Canada Trust and Canadian Imperial Bank of Commerce in increasing the cost of borrowing to buy a home.
The increases follow the Bank of Canada's surprising decision to leave its benchmark overnight rate unchanged at 3 per cent, rather than lowering it by a quarter-point as most bank economists had expected.
The central bank's overnight rate influences the commercial banks' cost of raising short-term funds that are then used by them to finance consumer mortgages.
CIBC kicked off the current round of mortgage-rate adjustments on Wednesday, but with relatively small increases compared with announcements that followed. TD Bank raised its rates by as much as 85 basis points (0.85 per cent) and RBC said Thursday it will boost its rates by up to half a point.
As of Bank of Montreal's announcement on Thursday, CIBC had the highest rate among five largest Canadian banks for one-year open mortgages at 9.24 per cent.
On the other hand, CIBC's five-year mortgage rate was 20 basis points lower than the Royal, TD or Bank of Montreal at 6.95 per cent. Bank of Nova Scotia had yet to announce its adjustments as of early Thursday afternoon.
