Banks quick to raise but slow to lower rates
Nothing new about this story…. Since April 11-2011, the 5 year bond yields went from 2.87%, down to 2.10% on June 24th, and have gone up slightly to 2.34% on July 1st…. Remember, fixed rates are closely tied to the govt of Canada bond yields…So that means the Banks would have lowered their fixed rates accordingly and then raise them slightly, right?
Well, not really… On April 11th, the Big Six Banks posted rates were 5.69%.. they went down slightly to 5.39% recently but are back up to 5.54%… What’s wrong with math…? Why didn’t the Banks reduce their rates accordingly? It’s called MAXIMIZING your PROFIT… The banks want to earn a little more at the borrowers expense.
I find it kinda funny but also frustrating when I see articles reporting that Bank profit margins on mortgages is shrinking… The spread between the 5 year bond yield and the posted 5 year fixed rate is around 3.20%… and historically, it’s been around 2.50% and sometimes even as low as 2.00%…. Where’s the fierce competition, I wonder?
Banks are a business that want to maximize their profits… Let’s not forget this.
Steve Garganis View All
As an industry insider, Steve will share info that the BANKS don't want you to know. Steve has appeared on TV's Global Morning News, CBC's "Our Toronto" and The Real Life TV show. He's also been quoted in several newspapers such as the Globe and Mail, The Toronto Star, The Vancouver Sun, The Star Phoenix, etc.
a very similar trend happens with gas prices. Quick to go up on even the slightest news, slow to come down. We the consumer, always loose.