5 big banks bump up prime lending rate following Bank of Canada’s interest rate hike

What is an interest rate?
ABOVE: With the Bank of Canada’s raising the key interest rate for the first time in seven years, we explain what an interest rate is and how it may affect you.

TORONTO – Canada’s five biggest banks are boosting their prime lending rates by 25 basis points, following an interest rate hike from the central bank.

Royal Bank of Canada, the Bank of Montreal, TD Bank, Scotiabank and CIBC all announced Wednesday they are increasing their prime rates to 2.95 per cent from 2.7 per cent, effective Thursday.

MORTGAGE CALCULATOR: See how rising interest rates affect your payments

The prime lending rate is the rate that banks use to set interest rates for variable-rate mortgages and other loans.

The moves comes after the Bank of Canada raised its key interest rate for the first time in seven years on Wednesday to 0.75 per cent from 0.5 per cent.

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